UK Financial News update
Stories of the week
1) Scrap the Risk Warnings System
A government-backed review says “capital at risk” warnings are putting people off investing. The UK has the lowest retail investment rate in the G7. Something needs to change.
The Investment Association has published a report commissioned by Chancellor Rachel Reeves arguing that the industry’s approach to risk warnings is actively scaring people away from investing. The report, “Supporting a New Retail Investment Culture,” says standardised, repetitive risk messaging has created a culture of risk aversion that is doing real damage to people’s finances.
The UK has the lowest rate of consumer participation in stock markets of any G7 nation. Just 8% of UK retail wealth sits in equities and mutual funds outside of pensions. Half is in property. 15% is in cash. In the US, the equity figure is 33%.
What’s the problem?
Every time you open an investment app, look at a fund factsheet, or read a pension statement, you’re hit with “capital at risk.” The phrase is everywhere. The review found that when people are given balanced information explaining both the risks and the long-term rewards, they invest more. When they’re just told their capital is at risk, repeatedly, in bold, in red, they don’t invest at all.
What’s changing?
The report calls on the FCA to give firms more flexibility to present risk in context. That means considering time horizon, diversification and how investment risk compares to the alternative: leaving money in cash. This isn’t about removing warnings. It’s about reframing them so people understand what kind of risk they’re taking, over what period, and compared to what.
The Wiseones Take
We’re fully behind this. The word “risk” has been weaponised in UK financial services. Telling someone their capital is at risk when they’re investing for 30 years in a globally diversified tracker fund is technically true but practically misleading. Over that kind of time horizon, the bigger risk is not investing.
And here’s where we’d go further: if we’re going to talk about risk properly, cash needs a risk rating too. Cash is fine for emergencies and short-term goals. But over 10, 20, 30 years? Inflation eats it alive. The Bank of England’s own calculator shows that £10,000 in 2006 is worth about £5,700 in real terms today. That’s a 43% loss in purchasing power. No warning label required, apparently.
If we’re serious about balanced risk communication, every long-term cash product should carry a warning: “Holding cash over long periods is likely to reduce the real value of your savings.” Until that happens, the playing field isn’t level.
2) Targeted Support Is Here. Royal London and Quilter Are First Through the Door.
The FCA’s new regime lets big firms offer tailored suggestions to groups of consumers. More people getting help is good. But who’s really being helped here?
The FCA’s Targeted Support regime went live on 6 April 2026. Royal London and Quilter are among the first firms to receive permission to deliver it.
What is Targeted Support?
It sits between guidance and advice. Currently, you either get generic information or fully personalised, regulated recommendations. Targeted Support fills the gap. Firms can now make suggestions to groups of consumers who share similar characteristics. Instead of sending those people a leaflet, firms can say: “People in your situation often benefit from considering X.”
It’s not full advice. It’s not tailored to you individually. But it’s more than most people currently get, which is nothing.
Royal London says 21.5 million people could use Targeted Support. Quilter is developing its offering through Quilter Invest, its platform for clients in the earlier stages of investing. The FCA has described the framework as a “once in a generation change” that could benefit at least 18 million people over the next decade.
The Wiseones Take
More people getting some form of financial help is better than millions getting none. The advice gap is real and enormous. If Targeted Support nudges even a fraction of those people toward better decisions, that’s a net positive.
But let’s be honest about what this is. The firms rushing to get permissions aren’t charities. They’re large insurers and platform providers. The FCA designed this regime with big institutions in mind because they have the scale, the data, and the customer bases. And what will they deliver? A product recommendation to a group of people who look roughly similar. That’s not advice. It’s a sales funnel with regulatory approval.
When Quilter says Targeted Support is “a bridge to financial advice,” what they mean is: we’ll catch people early, suggest they invest with us, and hope they stick around. One commenter on MoneyMarketing put it bluntly: this is a vertically integrated provider building a pipeline from uncertain prospect to captive client.
None of this means Targeted Support is a bad idea. It means we should be clear-eyed. Don’t confuse “here’s what people like you usually do” with “here’s what’s right for you.” Those are very different sentences.
3) Pension Withdrawals at 55 Hit a Five-Year High. The IHT Panic Is Real, and Premature.
116,000 people pulled lump sums from their pensions at age 55 last year. Total: £2.3 billion. Many of them could be making a very expensive mistake.
Research from Lubbock Fine shows the number of people accessing their pension as soon as they’re eligible has hit a five-year high. Withdrawals rose from 110,000 to 116,000 individuals, and the total value climbed to £2.3 billion from £2.1 billion.
Why now?
The Autumn Budget 2024 confirmed pensions will be brought within IHT from April 2027. For years, pensions sat outside the IHT net entirely. That’s changing, and people are reacting. Some are withdrawing and gifting money, hoping the seven-year rule protects it. Others are simply pulling cash out because they’re worried about a future tax bill for their family.
Lubbock Fine’s Andrew Tricker noted the trend is now spreading to people with decades of life expectancy ahead of them. His colleague Nicholas Clark warned activity will likely increase as the 2027 deadline gets closer.
The problem
The rules on how pension IHT will actually work are still not fully clear. The government has confirmed the broad direction but the operational detail is still being worked through. The House of Lords has already flagged concerns that the proposed six-month timeline for paying IHT on pension death benefits isn’t realistic. Pension schemes aren’t set up for this. No one has published a clear guide on how it all fits together.
People are making permanent financial decisions based on incomplete information.
The other problem
There’s a persistent myth that you have to take your 25% tax-free cash at 55. You don’t. The tax-free lump sum is available from 55, but there’s no deadline. You can leave it invested and take it at 60, 65, 70, or never. For many people, leaving it in their pension is the better option: it keeps growing, stays in a tax-efficient wrapper, and is there to pay for your retirement.
Without proper guidance, people are withdrawing money they don’t need, creating possible future tax liabilities they didn’t expect, and reducing their retirement income for decades.
The Wiseones Take
This is exactly where real financial guidance matters most. And it’s exactly where the new Targeted Support regime probably won’t help.
Targeted Support is designed for broad groups. It’s good for nudging someone toward a Stocks and Shares ISA or a suitable default fund. It is not designed to help a 56-year-old decide whether to withdraw £80,000 and gift it to their children before IHT changes land, factoring in their tax position, other assets, health, spouse’s pension, and the seven-year clock. That’s advice. Proper, regulated, personalised advice. And most people making these decisions don’t have it.
The combination of unclear rules, IHT panic, and the myth that you must take your tax-free cash at 55 is creating a wave of premature withdrawals that could leave a lot of people short in retirement. If you’re thinking about pulling money out because of IHT changes, do two things first: check what the rules actually say (not what your mate at work told you), and if the numbers are significant, speak to a financial adviser. The cost of advice is almost always less than the cost of getting this wrong.
Rate watch
Bank of England Bank Rate: 3.75% ↔️(Held 18th March)
- UK mortgage rates (typical averages):
- 2-year fixed (75% LTV): ~5.26% 🔼 0.01%
- 5-year fixed (75% LTV): ~5.24% 🔼 0.01%
- UK GDP +0.8% January 2025 to January 2026
- UK Inflation Rates year on year
- UK CPI – 3.0% 🔽 0.4%
- UK CPIH – 3.2% (including housing costs) 🔽0.2%
- UK RPI – 3.6% 🔽0.4%
Upcoming Dates For Your Diary
April 2026
- 30 April – Bank of England MPC interest rate decision
May/June 2026
- 31 May – Employer P60 deadline
- 18 June – Bank of England MPC interest rate decision
July 2026
- 6 July – FCA commodity derivatives reforms go live
- 30 July – Bank of England MPC interest rate decision
Wise Money Tips
(The tax year ends Sun 5 April 2026, but Good Friday is 3 April and Easter Monday is 6 April, so admin cut-offs land earlier.)
- Use your “use-it-or-lose-it” ISA allowance: up to £20,000 across ISAs in 2026/27 (frozen until April 2031). Don’t forget JISA £9,000 and LISA £4,000 (also frozen to April 2031).
- Dividend tax has risen from 6 April 2026: ordinary rate 8.75% → 10.75% and upper rate 33.75% → 35.75% (additional stays 39.35%). If you hold income shares outside wrappers, consider whether ISA/pension sheltering is worth it.
- Top up pensions before year-end (and check carry-forward): the annual allowance is £60,000 for 2026/27 (tapering can apply for higher earners).
- VCT timing matters this year: as of 6 April 2026, VCT income tax relief dropped to 20% (from 30%). VCT relief can’t be carried back.
- EIS/SEIS investors: unlike VCT, EIS/SEIS relief can usually be carried back to the previous tax year (useful if your tax bill is lumpy).
- Use key “small but real” allowances: Personal Savings Allowance (£1,000/£500/£0 depending on band), Marriage Allowance transfer, and the £3,000 annual IHT gifting exemption (resets each tax year).
- State Pension uplift as of 6 April 2026: full new State Pension rises £230.25 → £241.30/week; basic State Pension £176.45 → £184.90/week
- Quick check: NI record (especially age 50+): a top-up year can materially improve your State Pension outcome, it is worth checking your forecast and gaps before you start making irreversible year-end decisions