“Once-in-a-generation” proposals to help more people navigate tricky financial decisions and boost confidence when getting to grips with investments and pensions have been set out by the City regulator.

The proposals would enable firms to offer a new type of help called “targeted support” and make suggestions to groups of consumers with common characteristics.

The Financial Conduct Authority (FCA) is aiming to reduce the “advice gap” – so that people have timely access to the help they need, at a cost they can afford, to make informed decisions about their financial lives.

The FCA said people who may be currently drawing down on their pension unsustainably, not saving enough for retirement or who have excess cash sitting in a current account, could potentially be helped.

Sarah Pritchard, deputy chief executive of the FCA, said: “We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement.

“These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.”

The reforms should set the framework for the next 20 to 30 years, the regulator said.

The FCA said that as well as targeted support, it wants to see a thriving and trusted market for full financial advice, simplified advice and guidance.

It said the advice gap is “stark”. Just 9% of adults received financial advice about their pensions or investments in the previous 12 months, according to the FCA’s latest Financial Lives survey 2024.

Of those who did not receive financial advice, but hold £10,000 or more in cash savings, 24% said they do not invest because they do not know enough about it, 12% because they feel overwhelmed by the number of options available, and 8% said they would need more support before they invest.

The FCA said there are around seven million adults in the UK with £10,000 or more in cash savings who may be missing out on the benefits of investing throughout their lives.

Its consultation is open for eight weeks.

The regulator said it is also working with the Government to help resolve issues that might prevent firms communicating with consumers.

Dan Olley, chief executive at Hargreaves Lansdown, said the changes “will be truly transformational in kick-starting a thriving retail investment culture in the UK over the coming years”.