Despite the ongoing cost of living crisis (or perhaps because of it), the majority of UK adults are not seeking regulated financial advice.
According to a survey of 2,000 people between the ages of 18 and 75 by the FSCS, almost two-thirds (64 per cent) of UK adults with savings, investments or a mortgage have not sought regulated financial advice in the last five years.
And cost is very much the main driver. More than half (55 per cent) of those with any financial products think that “paying for financial advice is for the wealthy”.
Meanwhile, one in five of those who obtained free guidance rather than regulated advice said they did so because they believed the service was “too expensive”.
Despite the growing ‘advice gap’, the new findings also showed that among those UK adults that have paid for regulated financial advice, 62 per cent said that if they needed financial advice for a similar reason, they would use the same service from the provider they used before.
Mortgages drive advice
For those that were seeking advice, mortgages were the key driver. More than a third (38 per cent) were taking advice on their mortgage – the report noted that this was “likely from a specialist mortgage broker”.
When asked whether they trusted brokers, nearly half (48 per cent) believed mortgage advisers are very or fairly trustworthy. And while that seems a decent number, brokers lag behind the likes of solicitors, accountants and financial advisers in terms of trustworthiness.
Regional differences
Across the various regions in the UK, adults with savings, investments or a mortgage living in Greater London had been the most likely to seek financial advice in the last five years – with 49 per cent of them saying they did so.
This was followed by South England (38 per cent), Scotland (36 per cent), North England (34 per cent), and Wales (33 per cent).
Adults living in the Midlands were the least likely to seek financial advice (31 per cent).
Lack of knowledge could be exploited
The FSCS noted that the ‘advice gap’ could leave vulnerable consumers open to scams and could lead them to make poor financial decisions.
Caroline Rainbird, chief executive of FSCS, said: “The financial ‘advice gap’ is a concern for FSCS, particularly as scammers will prey on peoples’ fears and exploit any gaps in their financial knowledge, putting them at greater risk of making poor decisions about their money.
“Our latest research shows that consumers are looking for easy ways to invest, whilst also getting the right support. The FCA’s Consumer Investments Strategy looks to make advice on mainstream investments more accessible and affordable to everyone, which is something we welcome.”
“At FSCS, we see the impact of poor advice every day. It results in millions of pounds each year disappearing from consumers’ pockets. We can only offer protection on financial products and services that are regulated, and we encourage consumers to check if they are likely to have access to FSCS protection, if something goes wrong.
“It is important for people to be fully aware and confident about the decisions they are making with their money and the risks that come with taking guidance from unauthorised sources.”
