Flagstone CEO Simon Merchant has warned against the FCA going too far in pushing people away from holding cash.
FCA board chair Ashley Alder yesterday made comments indicating the regulator wants to encourage UK investors to take on more risk with their money in order to realise greater returns to fund their retirement.
Flagstone as one of UK’s largest savings platforms with £16bn of cash has a clear vested interest in the matter.
Merchant said: “Initiatives that aim to motivate informed individuals to make their money work harder and maximise its return potential should be welcomed but there’s a fine line between encouragement and pressure.
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“As we’ve seen with calls from the City to significantly limit or scrap Cash ISAs, what’s convenient for the City is not necessarily what’s right for consumers.
“Any move that makes retail investors or savers feel forced or coerced by their financial services providers to choose a higher risk-reward over a safety net would be both unfair and shortsighted – particularly later in life when typically your appetite for risk declines and your path to returns may be shorter.
“Investing requires a certain risk appetite – something that, for many, takes years to build, and then declines with age. Investing requires an understanding of the market, and a real appreciation of what ‘capital at risk’ really means.”
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Merchant added the success of the FCA’s plan will ultimately depend on balancing the City’s hopes with what consumers want.
“Where to hold your savings should be an individual decision, not one dictated by policy bias. Instead of forcing a shift, we should support consumers in making informed choices that align with their financial goals and risk tolerance.”
