City watchdog suggests that savers should stop hoarding money and start investing.

The city watchdog has advised Savers to stop hoarding too much money and instead invest it in the stock exchange.

The Financial Conduct Authority warns consumers that they are ‘potentially disadvantage’ The real value of their assets decreasesInstead of “upside potential from an Investment”.

It said the 4.2 million savers have at least £10,000 mostly held in cash, although they are open to investment.

The Financial Conduct Authority (FCA), in an advisory paper, outlines its plans to reduce cash savings by 20% over three years.

Deposits in savings accounts hit £1 trillion for the first time in September 2022, according to new analysis by Paragon Bank – up by £25 billion year-on-year.

Successive increases in bank interest rate have driven savings rates to record lows. The highest-earning fixed rates accounts now offer interest above 4%. Not taking advantage of the best rates.

Derek Sprawling from Paragon stated that the new analysis revealed that large amounts of money were still being held in low return accounts.

More than £428 billion is held in non-ISA ‘easy access’ savings accounts which offer interest of less than 0.5% while £142 billion is held in accounts paying 0.25% or less.

Financial Conduct Authority (FCA), stated it aims make financial advice more accessible to consumers. Get more savers who invest their money.

According to the FCA research, only 8% reported receiving financial advice in the last year. This indicates that the financial advice model has not been adapted to meet the needs of people with simpler investment goals and less money to invest.

The average advisor charges 1.9pc per annum to help clients manage their money, according to FCA research published in 2020, while many advisors will not accept clients with investable assets of less than £100,000.

FCA will reduce the qualifications required to advise on certain underlying financial instruments such as stocks or Isas shares, in order to better serve clients with direct needs.

Sarah Pritchard from FCA stated: “People across the UK need to have access to useful, affordable financial products that can improve their lives and support the economy.

“These proposals are part a our work to offer consumers an investment marketplace where they can easily access subsidies and companies don’t have to stop them from providing them.”