MTTM Podcast Episode 547 – New forms of financial advice and mastering the energy cycle

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The new financial advice landscape

Summary:

We examine the UK's financial advice gap and the regulatory changes brought in to help consumers access guidance. Following the Retail Distribution Review (RDR), full financial advice became expensive, limiting access for many. We explain the traditional models of whole-of-market and restricted advice, including the average costs involved. We then outline the new "targeted support" measures introduced in April 2026, which allow companies to use data to nudge customers toward helpful products, and the upcoming "simplified advice" model designed for one-off financial decisions. Finally, we clarify the different levels of Financial Services Compensation Scheme (FSCS) protection you receive depending on the type of advice or support you use.

Key Insights:

• The cost of full advice - Traditional financial advice is a significant investment. Research by Vouchedfor indicates average initial setup fees are around 1.86% of investable assets, with ongoing annual charges averaging 0.77%.
• Restricted vs Whole of Market - Restricted advice only looks at a limited range of products or providers, and research suggests it can sometimes cost up to 0.28% more per year than whole-of-market advice due to firms controlling more of the supply chain.
• Targeted Support - Launched in April 2026, targeted support allows institutions like banks to use data segmentation to send helpful, non-personalised nudges (e.g., suggesting a stocks and shares ISA to someone holding excess cash).
• Simplified Advice - This upcoming model provides a legally binding, personal recommendation for a single financial issue without requiring a costly, holistic review of your entire life.
• Protections vary significantly - With targeted support, a firm is only liable if their algorithm miscategorised you. With simplified and full advice, the firm takes regulatory liability for the specific product recommendation or the comprehensive financial plan, respectively.

The Energy Payment Cycle explained

Summary:

We revisit the annual energy payment cycle to explain why late spring is the optimal time to assess your direct debit payments. Because energy usage drops significantly after winter, May represents the lowest point in your account's natural credit cycle. If you are holding significant credit now, you are likely overpaying. We discuss the recent April 2026 price cap drop to £1,641 and the predicted 15% increase arriving in July. We outline four practical steps to secure an energy refund safely, including how to calculate a protective buffer to prevent your supplier from arbitrarily raising your payments later in the year.

Key Insights:

• Understanding the cycle - Monthly direct debits mean you build up credit in the summer to pay for heavy winter usage. May is when your balance should naturally sit at its lowest point.
• Prices are predicted to rise - While the energy price cap fell in April 2026, analysts forecast a 15% surge from July 1st, pushing the typical annual bill to roughly £1,850.
• Calculate a safe buffer - Before requesting a refund, ensure your account retains at least two months' worth of direct debit payments. This protects you against the upcoming July price rises and stops algorithms from automatically increasing your monthly payments.
• Beware of billing quirks - Some providers, like British Gas, only deduct actual energy usage from your credit balance quarterly. You must manually calculate your usage since your last bill to find your true account balance.
• Claim closed account compensation - If you switch suppliers or move house, your old provider has exactly six weeks to issue a final bill and 10 days to refund your credit. If they miss these strict deadlines, they owe you an automatic £40, plus an additional £40 for further delays.

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