On 28 June 2025, the FCA published its latest consultation CP25/17 ‘Supporting consumers’ pensions and investment decisions: proposals for targeted support’.1 Building on the previous Consultation CP24/27, this newest paper covers both retail investments and pensions and includes draft rules. While largely following previous proposals, there are some important changes and additional detail.
In this article, I will cover the high-level proposals around targeted support, considering the potential impacts on advisers:
- The purpose of targeted support
- The targeted support framework
- Suggested ‘situations’ where targeted support might – and must not - be used
- The regulatory backdrop
- Communicating with customers
- Costs and charges
The purpose of Targeted Support
Targeted support is part of HM Treasury and FCA plans to close the highly persistent ‘advice gap’. They want retail customers to be able to access a ‘continuum’ of support – guidance, targeted support, simplified advice and full financial advice - providing the help they need, at a cost they can afford, when they need it. The FCA plans to consult further on simplified advice in January 2026.
The targeted support framework
Targeted support will be a new regulated activity, and the FCA sets out what information it will require from firms seeking authorisation. Firms who receive authorisation can create targeted support offerings where they have good reason to believe this will deliver better outcomes than if targeted support had not been provided – for example if customers follow a suggested course of action or are better informed.
The firm will:
- Identify situations where additional help should deliver better outcomes for groups of customers.
- Determine customer segments based on those sharing common characteristics.
- Design and deliver ready-made suggestions for each segment.
Customer segments must be defined with ‘sufficient granularity’ to permit a ‘suitable’ suggestion for the group but shouldn’t be overly personalised as this then becomes regulated advice. The segments must be defined so a customer aligns with a single segment. Further examples from the FCA would be helpful here.
Segments can be defined using ‘including’ and ‘excluding’ common characteristics. Customers can only be placed in a segment if they exhibit all ‘including’ and no ‘excluding’ characteristics. The FCA accepts this could mean customers with particular vulnerabilities are excluded, and suggests here that firms might create extra segments to support those with such vulnerabilities.
Suggested ‘situations’ where targeted support might be used
The FCA won’t prescribe the situations where targeted support can be used but does provide some examples. For each, it sets out what could currently be offered under guidance and what more can be provided under targeted support. These include where consumers are:
- Under-saving for retirement – under targeted support firms can suggest a future contribution rate, not just that the customer may be under-saving
- Struggling with retirement access decisions – firms can suggest a particular approach rather than just setting out the options
- Drawing down pension unsustainably – suggest an alternative withdrawal rate
- In a position to invest – the focus here is on those with more than £10k in investable assets held entirely in cash – firms can suggest a specific investment product
- Already have an investment product – suggest an alternative product
- Investing in an expensive fund – suggest a cheaper fund
- Choosing between investments and pension products – suggest either a specific investment or pension product
‘Situations’ where targeted support can’t be used
There are also some situations where the FCA doesn’t believe targeted support is appropriate:
- Pensions consolidation. Perhaps surprisingly, the FCA is proposing targeted support can’t be used to suggest consolidating into or out of a particular pension product. It cites concerns over special features lost on consolidation and the individualised nature of support needed.
- Annuities. The FCA previously proposed firms wouldn’t be able to offer any suggestion around annuities. The latest proposals would permit firms to suggest a form of annuity (e.g. escalating, joint life) but not a specific annuity product with a particular provider. Firms will also be required to signpost to MoneyHelper Annuity Service, which will allow them to shop around based on their personal circumstances including health status.
- High risk investments and safeguarded pension benefits are also, as expected, out of scope.
The regulatory backdrop
HMT is due to launch a consultation on 15 July around this new regulated activity of targeted support. The FCA says this will be ‘over’ the personal recommendation boundary, alongside simplified and holistic advice. However, as targeted support recommendations won’t be personalised to the individual, FCA regulations will differ to reflect this.
The FCA and HMT want guidance services to continue, so a service will be classed as targeted support only if it goes beyond what can currently be offered as guidance. Firms have struggled to be certain where the current advice / guidance boundary lies, so this new support / guidance boundary may need further clarification.
The FCA will allow advice firms to apply for targeted support permissions. While this may not have widespread appeal, it may be attractive to some larger adviser firms, for example those active in the workplace pensions market, with significant numbers of non-advised workplace pension members. Appointed Representatives won’t be permitted to offer targeted support initially. The FCA is hoping adviser firms will take more interest in a new form of simplified advice.
Generally, the FCA is seeking to avoid introducing new regulations, instead relying heavily on the Consumer Duty as well as existing handbook rules including COBS and PROD. Guidance around supporting vulnerable customers must also be followed.
While customers may be eligible for compensation from both FOS and FSCS, the FCA is stressing it’s working closely with FOS to ensure complaints, originating from the provision of targeted support, are not assessed against the same standards as full advice. Hopefully further details will follow soon.
Communicating with customers
All targeted support communications must comply with Consumer Duty requirements. Firms must explain the nature of the service, how suggestions are designed for groups of customers, and make clear the customer is not receiving individual advice. Firms must explain the common characteristics defining the customer’s segment so customers understand and can check these are valid. If a firm’s suggestions are limited to their own products, this must also be highlighted.
Firms will be required to advance-test all targeted support communications and the FCA is encouraging those designing communications to read the results of its behavioural testing.
The FCA recognises there’s a significant issue with the Privacy and Electronic Communications Regulations (PECR). Targeted support will suggest a particular course of action, so is likely to be direct marketing. There are additional issues if providing the service to workplace pension members where the ‘soft opt-in’ rule isn’t available. The FCA is exploring possible solutions with the Information Commissioner’s Office and Government. This will be key – without a solution, the reach of targeted support will be much reduced.
Costs and charges
To maximise take-up, the FCA will allow (and indeed in most cases expects) firms to offer targeted support free of charge. Firms will, however, need to make some type of statement around the nature of the service and how they may benefit financially.
Alternatively, firms can make a charge which is reasonably representative of the cost, subject to appropriate disclosures.
Next steps
The FCA consultation closes on 28 August. On 15th July, HMT is expected to launch its consultation on this new Regulated Activity. The consultation on simplified advice is due in January 2026. Finally, the gateway to apply for authorisation is due to open in March 2026.
What this means for advisers
We appreciate that most adviser firms may not view targeted support as appropriate or commercially viable for their existing advised client base. However, it could be a stepping stone for future customers who go on to seek either simplified or holistic advice, creating a route to future organic growth. It could also offer a way of giving less personalised support to customers who don’t need ongoing advice. It may also be of interest to some larger adviser firms with significant numbers of non-advised clients, for example workplace pension members.
Aegon will continue to analyse developments and support the continued growth of the advice sector alongside these new services.
- CP25/17. Supporting consumers’ pensions and investment decisions: proposals for targeted support. Data source, FCA, June 2025.