FCA Unveils Near-Final Rules for 'Targeted Support' in UK Pensions and Retail Investments

FCA Introduces New Framework for Investment Support

The UK Financial Conduct Authority (FCA) has announced the publication of its near-final rules for a new regulatory framework designed to offer 'Targeted Support' for pensions and retail investments. This significant development, outlined in policy statement PS25/22, aims to provide millions of consumers with more accessible and tailored guidance for their financial decisions. The framework is a key outcome of the joint Treasury and FCA Advice Guidance Boundary Review (AGBR).

The new rules are intended to bridge the long-standing 'advice gap' in the UK, where many individuals are underserved by traditional financial advice. Sarah Pritchard, Deputy Chief Executive of the FCA, stated, 'Targeted support will be game changing. It means millions of people can get extra help to make better financial decisions.'

Addressing the 'Advice Gap' and Consumer Duty

The 'advice gap' refers to the challenge many consumers face in obtaining personalised financial recommendations, often due to the cost or complexity of full financial advice. The FCA's latest research highlights this need, noting that 75 percent of defined-contribution pension-holders aged 45 or over lack a clear plan for accessing their money.

Under the Targeted Support framework, authorised firms will be permitted to provide investment and pension recommendations to groups of consumers with similar characteristics. This approach will not require individualised suitability assessments, a key differentiator from full financial advice, but will remain subject to the overarching Consumer Duty and product governance requirements. The Consumer Duty, which came into force in July 2023, mandates that firms act to deliver good outcomes for retail customers, ensuring fair value, clear understanding, and adequate support.

Key Features of the Targeted Support Framework

The near-final rules introduce several important provisions:

• Group-Based Recommendations: Firms can offer suggestions to segments of consumers sharing common characteristics, directing them towards products or actions that could improve their financial position.
• No Individual Suitability Assessments: This streamlines the process, making support more scalable and potentially more affordable.
• Authorised Firms Only: Only firms authorised by the FCA will be permitted to provide targeted support.
• Comprehensive Standards: The rules cover various aspects including design and delivery standards, disclosure obligations, charging mechanisms, remuneration, and ongoing monitoring of outcomes.
• Clarified Purpose: The purpose statement has been updated from 'better outcomes' to 'better position' to avoid confusion with Consumer Duty obligations and clarify policy intent.
• Annuity Guidance: The framework evolves the approach to annuities, allowing firms to direct consumers to whole-of-market annuity brokerages.
• Disclosure Requirements: New rules mandate that firms clearly label the service as 'targeted support' when providing suggestions.

Implementation Timeline and Industry Preparation

The FCA has published these near-final rules to provide firms with ample time to prepare for the new regime. The gateway for firms to begin applying for permission to provide targeted support is expected to open in March 2026. Subject to necessary legislation, the rules are anticipated to officially take effect from 6 April 2026.

To facilitate a smooth transition, the FCA has also issued joint statements with the Financial Ombudsman Service (FOS) and the Information Commissioner's Office (ICO). These statements clarify how complaints related to targeted support will be handled and how firms can communicate with consumers within existing direct marketing rules. Lucy Rigby KC, Economic Secretary to the Treasury, commented that this extra support 'has the potential to be transformative for retail investment in Britain.'