Many Britons are daunted by the world of investing, but new City rules mean certain banks and financial institutions can offer free extra help with investments and pensions.

Last month marked the launch of “targeted support”, a new regulated service that permits companies to suggest investments and pension products to customers that might provide a better return.

The service aims to bridge a gap between general guidance and information and financial advisers who charge a fee.

Companies – a list likely to include banks, building societies and investment platforms – have to be authorised in advance by the Financial Conduct Authority (FCA). Most advice is expected to be free with commission payments banned.

If, say, you have a largish sum – perhaps several thousand pounds – sitting in a high street bank savings account, you may see a message pop up suggesting that you consider investing some or all of this money, with a link you can click on. It will take you to the investment options offered by the bank. These may include a stocks and shares Isa or a pension plan.

These suggestions will not take the form of individually tailored financial advice, which is increasingly only an option for the very well-off. However, they will be based on what the companies “would recommend to those in similar circumstances”, so they should be better than totally generic guidance.

The aim of targeted support is to help people make better-informed financial decisions, the FCA says. It estimates there are about 7 million adults in the UK with £10,000 or more in cash savings “who could be missing out on the benefits of investing”.

As well as people who may be in a position to invest some of their cash, customers who are judged not to be saving enough for retirement are likely to be targeted.

The regulator said that many consumers who were in a position to invest but chose not to did so because they were unsure of their options or needed more support. Fewer than one in 10 people obtain regulated financial advice. However, almost one in five investors turn to social media for help making decisions.

The wealth manager Quilter and the insurance group Royal London are among the first names to have gained permission to offer the service. Some companies do not plan to participate, while others such as Barclays say it is something they intend to launch and are supportive of.

Steven Levin, the Quilter chief executive, said: “Deciding whether and how to invest can be a daunting experience for people, leading to a dangerous inertia. We want to offer a simple and accessible way to get started.”

The pension company Scottish Widows has been looking at how advice could be given using an AI agent that it has begun rolling out on its app. The company describes the agent as working “like [a] satnav, by helping people understand their options and choose a route that makes sense for them, based on others on a similar journey”.

The FCA hopes targeted support will make people more confident about investing –one of the government’s hobby horses.

The chancellor, Rachel Reeves, wants to create “more of a culture in the UK of retail investing, to earn better returns for savers”. Last month there was also the launch of Savvy Squirrel – a government-endorsed advertising blitz fronted by a CGI squirrel designed to encourage cautious British savers to start investing.

The Treasury says the UK has the lowest level of retail investment among the countries of the G7 (the group that also includes the US, France, Germany and Japan), which means savers “are not getting the best bang for their buck” and UK businesses are being “starved of an important source of capital”.

According to the government, stocks and shares “have performed significantly better than cash savings accounts in recent decades”. Investing does come with some risk as the value of an investment can go down as well as up, but the spending power of cash savings can be eroded by rising prices.

The consumer body Which? adds that people should not just assume that an investment product offered by their bank will automatically be the one best suited to their needs.