FCA shares ‘near final’ rules for targeted support
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The Financial Conduct Authority is moving forward with ‘targeted support’ for savers, publishing “near final” rules that are expected to apply from 6 April. Joint statements with the Financial Ombudsman Service and Information Commissioner’s Office seek to address industry concerns.
Targeted support is being introduced in response to the advice gap, with just 9% of adults receiving financial advice in the year to May 2024. The gap became a particular issue after the introduction of pension freedoms, with guidance service PensionWise not reaching significant numbers.
While targeted support will be less personalised than full financial advice, it will be capable of reaching a much greater number of consumers, according to the FCA, which estimates at least 18m people could be offered targeted support within a decade.
Targeted support is being introduced in response to the advice gap, with just 9% of adults receiving financial advice in the year to May 2024. The gap became a particular issue after the introduction of pension freedoms, with guidance service PensionWise not reaching significant numbers.
While targeted support will be less personalised than full financial advice, it will be capable of reaching a much greater number of consumers, according to the FCA, which estimates at least 18m people could be offered targeted support within a decade.
“Targeted support will be game changing. It means millions of people can get extra help to make better financial decisions,” said Sarah Pritchard, deputy chief executive of the FCA.
The FCA does not expect any significant changes in the final rules but did not rule out amendments, including to account for the legislation.
Lucy Rigby KC, economic secretary to the Treasury, said: “Targeted support will allow millions of people across the country to supercharge their savings and invest with confidence. This extra support for savers has the potential to be transformative for retail investment in Britain.”
Before targeted support goes live, the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2026 will need to be passed – the Treasury has said this will happen “as soon as parliamentary time allows”. It has also published the response to its July consultation on draft legislation.
The FCA expects the new regime to take effect on 6 April next year. The gateway for applications is due to open in March, and the FCA is offering a pre-application service to help firms prepare.
Controls on firm authorisation will be key for saver protection
The difference between targeted support and advice is that recommendations will not be personalised but based on a set of characteristics that providers will need to specify beforehand.
As per the original proposals, firms will need to be authorised before they can make recommendations and direct people to specific products or to take actions with their existing products. Authorised firms will be able to offer targeted support proactively or reactively.
The FCA envisages that only a relatively small group of large firms will receive authorisation to provide this new specified activity, in part to protect savers from rogue actors.
The FCA will also need to continue to protect savers from firms offering services for which they are not authorised or regulated and has recently launched a new 'Firm Checker' tool for consumers, urging people to check on any firm they are dealing with.
No break required between targeted support and annuity sale
As per the initial proposals, the permission under targeted support to recommend specific products does not extend to pension consolidation or annuities, which the FCA says cannot be based on shared characteristics but would require personalised data.
However, the rules around annuities have been softened somewhat since the June consultation. Firms offering targeted support can still only recommend an annuity in general, not a particular annuity product. However, the FCA is now allowing them to direct consumers to whole of market annuity brokerages – which receive commission from providers – rather than just to MoneyHelper as initially proposed.
Following industry feedback, it also no longer requires there to be a break between targeted support and annuity sale. The FCA previously argued that the irreversible nature of such lifetime products meant a break was warranted before consumers are taken on a sales journey, but it has now changed its mind “because of the frictions in existing annuity consumer journeys and the communication requirement at the end of the targeted support journey”.
In addition, it takes the view that the requirement to direct the consumer to MoneyHelper’s annuity comparison tool before providing information on an annuity brokerage provides a “soft break”.
Fixed-term annuities will be exempt from the rules around annuities because the watchdog does not consider them irreversible, as they contain a surrender option.
Joint statements with FOS and ICO aim to address crunch points for industry
Recommendations normally come with liability, and one of the questions the pensions industry has had around the proposals was whether they would be liable if a consumer takes a complaint to the Financial Ombudsman Service.
The FCA has issued a joint statement with FOS saying targeted support relates to a point in time, so there will be no ongoing suitability requirements, and firms will not be judged with hindsight.
This does not let providers of targeted support off the hook, however. A firm “must not provide a consumer with a suggestion if there is information of which the firm is aware, or of which it ought reasonably to be aware, that indicates that the suggestion with which the consumer has been matched may be unsuitable,” the two agencies note.
They highlight also that cases may arise where the interpretation of the FCA’s rules is unclear and affects a larger number of consumers. In July 2025, the FCA and FOS issued an updated Memorandum of Understanding which they will apply in the context of targeted support in such cases. They also point out that the government is currently considering reforms to the redress system.
James Dipple-Johnstone, interim chief ombudsman, said FOS has been working closely with the FCA on their new rules for targeted support.
The FCA has issued a joint statement with FOS saying targeted support relates to a point in time, so there will be no ongoing suitability requirements, and firms will not be judged with hindsight.
This does not let providers of targeted support off the hook, however. A firm “must not provide a consumer with a suggestion if there is information of which the firm is aware, or of which it ought reasonably to be aware, that indicates that the suggestion with which the consumer has been matched may be unsuitable,” the two agencies note.
They highlight also that cases may arise where the interpretation of the FCA’s rules is unclear and affects a larger number of consumers. In July 2025, the FCA and FOS issued an updated Memorandum of Understanding which they will apply in the context of targeted support in such cases. They also point out that the government is currently considering reforms to the redress system.
James Dipple-Johnstone, interim chief ombudsman, said FOS has been working closely with the FCA on their new rules for targeted support.
“Whilst most complaints will be handled directly by businesses without our involvement, those that come to our service will be considered with careful attention to the FCA’s guidelines, as required by the rules governing our work,” he said. “Through continued engagement with industry and close alignment with the FCA, we will deliver a consistent and proportionate dispute resolution approach to targeted support.”
Another area the industry was concerned about was how targeted support would interact with rules on direct marketing.
The FCA has, similarly, produced a joint statement with the Information Commissioner’s Office. The ICO stressed that where customers have not consented to receiving electronic direct marketing and the soft opt-in for similar products does not apply, firms must respect the direct marketing preferences of their customers.
“However, this does not prevent you from making customers aware of your new authorisation to provide targeted support, where you have been provided with this authorisation,” the ICO said. “You could do this by sending a message (eg an email) to customers which doesn’t constitute direct marketing but ensures customers are aware of your targeted support authorisation from the FCA so that the customer can choose, if they wish, to be part of it.”
The message would need to be factual and neutral without encouraging a course of action, such as clicking on a particular link.
The FCA has, similarly, produced a joint statement with the Information Commissioner’s Office. The ICO stressed that where customers have not consented to receiving electronic direct marketing and the soft opt-in for similar products does not apply, firms must respect the direct marketing preferences of their customers.
“However, this does not prevent you from making customers aware of your new authorisation to provide targeted support, where you have been provided with this authorisation,” the ICO said. “You could do this by sending a message (eg an email) to customers which doesn’t constitute direct marketing but ensures customers are aware of your targeted support authorisation from the FCA so that the customer can choose, if they wish, to be part of it.”
The message would need to be factual and neutral without encouraging a course of action, such as clicking on a particular link.
William Malcolm, executive director regulatory risk and innovation at the Information Commissioner’s Office, said: “Organisations offering this support will need to process people’s personal information. Data protection law enables people’s personal information to be used in ways that empower and benefit them, while safeguarding their rights.”
Malcolm added: “Our teams at the ICO and FCA have worked closely together to provide regulatory clarity to industry about how they can contact their customers about this new offering.”
The ICO and FCA said they “will consider further options for future engagement from early 2026 to continue to support firms who want to contact customers about targeted support”.
Malcolm added: “Our teams at the ICO and FCA have worked closely together to provide regulatory clarity to industry about how they can contact their customers about this new offering.”
The ICO and FCA said they “will consider further options for future engagement from early 2026 to continue to support firms who want to contact customers about targeted support”.
Industry is positive
Providers have welcomed the rules, citing saver confusion over pensions and low levels of advice take-up. Yvonne Braun, director of policy, long-term savings at the Association of British Insurers, said targeted support has the potential to make a real difference to people’s financial lives.
“The FCA’s new rules mark a significant step towards closing the advice gap and will empower millions,” she said.
Cath Sermon, head of public engagement and campaigns at Standard Life’s Centre for the Future of Retirement, said the rules are “a positive step which will help ensure that savers don’t feel overwhelmed when making decisions around their pensions”.
She added: “Now is the time for the industry to help shape a service that supports people with some of the most challenging and significant financial decisions they will ever make.”
Pete Maddern, managing director retirement at Canada Life, was also positive.
Pete Maddern, managing director retirement at Canada Life, was also positive.
“We particularly welcome the FCA’s decision to allow targeted support providers to direct consumers to whole-of-market annuity intermediaries following a targeted support suggestion," he said.
Key to the success of this initiative will be execution, argued David Brooks, head of policy at consultancy Broadstone, saying firms will need clarity on the advice/guidance boundary to ensure that targeted support does not create new risks or uncertainty.
Master trusts and other DC schemes should also take note, he suggested: “Trustees of occupational schemes would be wise to keep abreast of targeted support developments as it is likely that it will apply to the communications and support that they deliver to members.”
Targeted support will become available just ahead of a new requirement on schemes to offer guided retirement, set to come in from 2027 for master trusts and 2028 for other DC schemes. The FCA previously said it is developing its policy for guided retirement in contract-based schemes.
