Inflation warning for cash holdings

Inflation risk for advised clients with sustained and increased levels of cash holdings - effective from 1 December 2023

The background 

As you may be aware, the Financial Conduct Authority (FCA) has recently published rules which require us to provide a warning to clients who hold certain levels of cash or cash-like funds for a sustained period of time. 

How this affects your advised clients

The FCA has noted that clients - whether advised or non-advised - are at risk of having their pension savings eroded by inflation. The regulation states that if a customer is more than 5 years away from either normal minimum pension age or their protected pension age if lower, holds more than 25% in cash or cash-like investments for a period of six months (subject to a minimum value of £1,000) we, as their platform provider, must make them aware of this. The cash warning will illustrate the effects of inflation on their long-term savings objectives.

How we can help 

Given the potential for inflation to erode investments - and the increased regulatory scrutiny around this topic - we’ve listed below some of the holdings that would be classified as cash or cash-like investments. Please take note of these so you can assess which of your clients we’ll be writing to with this cash warning.

• SIPP product cash
• Cash funds
• Other cash-like investments
• Any of the cash products listed in the table below

The best way to find out which of your clients have investments in these types of cash or cash-like products is to create a Holdings Report through our online Reporting Services, which you’ll find here on your screen: