As part of its bumper crop of publications last December, the FCA published its Policy Statement confirming how Targeted Support will be implemented.
This heralds the new regulated activity of Targeted Support, which both FCA and Government hope will offer greater support to the millions of people who don’t currently seek advice. This will include supporting customers on whether and how to invest – as well as on saving adequately for retirement and accessing Defined Contribution pensions at retirement. Unlike guidance, it will involve a suggestion regarding a specific investment product.
Firms offering Targeted Support will need to have reasonable grounds to believe its provision will put customers in a ‘better position’. For each situation involving financial support needs or objectives, it will identify consumer segments, then design and deliver suitable ready‑made suggestions to those in each segment. The nature and limitations of Targeted Support must be communicated to make sure consumers can distinguish it from the activity of advising on investments.
Firms wishing to offer Targeted Support will need to obtain a new regulatory permission. They can already access the FCA’s Pre Application Support Service ahead of the authorisation Gateway opening in March 2026. Subject to the Government legislating for this new regulated activity, the rules will take effect from 6 April 2026.
Alongside the Policy Statement, the FCA published joint statements with:
- The ICO on Targeted Support and Direct Marketing
- The FOS on How the Financial Ombudsman Service will assess Targeted Support complaints
To complete the package, HM Treasury also provided an update on the legislative changes to introduce Targeted Support.
Changes to the original proposal
Following industry feedback to its two consultations over 2025, the FCA is making some key changes to its proposals including:
- Labelling: The service must be referred to explicitly as ‘Targeted Support’ when communicating a ready-made suggestion.
- Signposting: Instead of suggesting pension customers ‘consider obtaining targeted support’, firms must signpost to a MoneyHelper webpage for information. This has sensibly been deferred by 12 months to April 2027, allowing time for firms to start offering the service.
- Remuneration: There’s no longer a requirement for firms which don’t charge explicitly for Targeted Support to explain how they’re remunerated or any cross-subsidisation arrangements. This is likely to be welcomed by vertically integrated firms offering Targeted Support.
- Sufficient granularity: When firms are defining consumer segments, they mustn’t use a level of detail that would broadly be associated with providing investment advice. I’m pleased the FCA has also confirmed that it will publish case studies before the regime goes live to help firms understand the ‘sufficient granularity’ test when designing consumer segments.
- Annuities: While Targeted Support can’t suggest a particular annuity product, firms will now be allowed – after offering Targeted Support – to direct consumers to whole of market annuity brokerages, with no requirement for a specific ‘break’ period.
- Ongoing monitoring: Firms must monitor that ready-made suggestions remain suitable for pre-defined consumer segments, but aren’t required to monitor individual customer outcomes. This reinforces that Targeted Support is a one-off service.
- Terminology: Firms must demonstrate customers receiving Targeted Support will be in a ‘better position’ rather than having ‘better outcomes’. This avoids potential confusion with Consumer Duty ‘good outcomes’.
- Investment pathways: Where a customer has been provided with a relevant ready-made suggestion around drawdown investments and is actioning that, the firm won’t be required to offer investment pathways.
Trust-based schemes
The latest paper also includes a chapter for pension scheme trustees on Targeted Support, with many trustees expressing interest in offering support ‘akin to’ Targeted Support.
Suggestions relating to ‘in-scheme’ trust-based pension benefits don’t fit within the definition of Targeted Support because these are not FCA regulated investment products. However, any support offered by trustees on a specific FCA-regulated investment would require the appropriate permissions – advice or Targeted Support.
This may need revisited once the Pension Schemes Bill requires trustees to offer Default Pension Benefit Solutions, possibly from 2027.
What's not changing
- Minimum capital: The FCA hasn’t accepted arguments made by Aegon and others that its proposed £500,000 minimum capital requirement is excessive. This remains part of the rules, creating a significant barrier for all but the largest adviser firms to offer Targeted Support.
- Pensions consolidation: The FCA has maintained its position that pension consolidation requires consideration of a client’s individual circumstances, so is not appropriate for Targeted Support. Firms can still give guidance on consolidation, so long as this doesn’t include a specific suggestion to consolidate. The FCA has also published radical new proposals on non-advised pension transfers in CP25/39 which could have big implications for the market.
- Appointed representatives: As proposed, appointed representatives will not for now be permitted to offer Targeted Support but this will be reviewed after the ongoing reforms to the AR regime are well established.
Direct Marketing, PECR and GDPR
Alongside the Policy Statement, the FCA issued a joint statement with the ICO on Targeted Support and Direct Marketing. This explains the interaction between Targeted Support, GDPR, and the Privacy and Electronic Communications Regulations (PECR). It sets out considerations around how direct marketing permissions and the use of ‘soft opt-in’ apply in the context of Targeted Support.
Importantly, the Treasury has also announced it will produce secondary legislation to allow workplace pension providers to deliver Targeted Support communications to members who haven’t specifically opted out of direct marketing. This removes a major barrier to Targeted Support to new and existing auto-enrolees where the ‘soft opt-in’ exemption can’t be used.
FOS rulings
We also received a joint statement from FCA and the FOS on how the FOS will assess Targeted Support complaints.
The FOS recognises that Targeted Support is different from investment advice. It isn’t subject to individual suitability requirements; is based on ready-made suggestions for customer segments; and is a one-off service with no ongoing suitability assessments. But the FOS will consider if firms have correctly aligned customers with a segment and taken into account information the firm is (or ought reasonably to have been) aware of.
Where the FOS is considering a ruling that could have wider implications, and FCA rules are unclear, there will be a mechanism to seek a view from the FCA on the interpretation of the rules. Firms and consumers will be able to request the FOS seeks such a view. This is aligned with the proposals set out earlier in 2025 for wider changes to the FOS redress system.
Advice Guidance Boundary Review
While there’s been much focus on Targeted Support, the FCA continues to highlight that this is one of a spectrum of support measures, with a consultation on Simplified Advice due shortly. HM Treasury has also confirmed that, for a service to be Targeted Support, it must suggest a specific investment product. Where this isn’t the case, and it’s not regulated advice, the service will be classed as guidance.
This creates some new considerations. While Targeted Support must include a suggestion regarding a specific investment product, it can’t take into account too many details about the individual, instead being designed for groups of individuals sharing common characteristics. In contrast, guidance can’t suggest a specific investment product, but can be based on full personal details which can then be used in digital tools to give more personalised, tailored insights. This means Targeted Support will not necessarily be of greater help to a customer than Guidance. We could see the development of a new generation of guidance services with tools competing with Targeted Support services – both having relative advantages.
What’s next
Subject to the Government legislating for the new regulated activity in time, firms should start receiving permissions to offer Targeted Support from April 2026. Ahead of that, we’ll receive more guidance on ‘sufficient granularity’. We’re also due secondary legislation to allow Targeted Support to work with auto-enrolees. Look out also for the FCA’s consultation on simplified advice, which will be accompanied by clarifications on the Advice Guidance Boundary.
What this means for advisers
I expect most adviser firms, and certainly smaller firms, won’t be considering offering Targeted Support – the minimum £500,000 capital requirement is an issue, and scale is needed to be able to create customer segments. However, some larger adviser firms and EBCs may see the potential to extend their services to non-advised customers through Targeted Support.
Whether offering it or not, adviser firms will be interested to see how Targeted Support fits within the current market, if it creates opportunities to plug the ‘support gap’ and if it leads to more people seeking advice in the longer term.
As the year progresses, we’ll have a clearer picture of which providers and adviser firms will be offering it, and in which situations. Will the banks be first into the market, suggesting customers with ‘excess’ cash invest some of it? Offering Targeted Support in the pension environment will be more complex, so when and how might it emerge there? And interestingly, might we see new guidance tools and services emerge to help plug the support gap?
What’s for sure is that neither Targeted Support nor enhanced guidance can ever replace full financial advice. But some of today’s non-advised customers using new services may be the advised clients of the future.