Britain’s financial regulator must amend rules governing how investment-risk warnings are presented or retail investors will continue to shun ​stocks and shares, the country’s investment industry said in a report published ‌this week.

A review, commissioned by the government and led by the Investment Association, found that investment firms were reluctant to heed growing evidence that existing “capital at risk” warnings are widely misunderstood and ​deter people from investing for the long term.

The report recommends that the ​regulator make it clearer that firms can present a balance ⁠of the risks and rewards of an investment, paving the way for them ​to scale back repetitive warnings where they are not deemed necessary.

Britain has the lowest rate of ​consumer stock market investment among the G7 group of developed nations, the report found, adding “well-intentioned” policy had led to widespread risk aversion.

“This is a concrete example of where a culture ​of too much risk aversion is harming household finances, and it must change,” ​Britain’s financial services minister Lucy Rigby said in a foreword to the report.

The ruling Labour Party ‌wants ⁠savers to put more of their cash into equity markets as part of its core promise to boost the UK’s lacklustre economic growth rate, with a reduction in regulation seen as one way to encourage them.

The Financial Conduct Authority, which ​oversees financial promotions, ​is already overhauling ⁠the framework for retail investments as part of efforts to boost economic growth.

In December, it clarified that it does not ​prescribe “capital at risk” wording. The watchdog has also previously said ​it would ⁠review its rules for investment promotions, to give firms more confidence to discuss the risks of mainstream investments proportionately.

FCA Deputy Chief Executive Sarah Pritchard said the regulator welcomed ⁠the ​review’s push for clearer communication about risk and ​reward.

A stronger UK investment culture relied on consumer confidence built on clear and balanced information about rewards ​and risks, she added.