Closing the advice gap: FCA consults on detailed proposals for targeted support

The Financial Conduct Authority (FCA) published a consultation paper (CP25/17) on 30 June 2025 setting out its detailed proposals for “targeted support” in pensions and retail investments. This new form of support will enable firms to offer ready-made suggestions tailored for groups of consumers with common characteristics and help them make informed financial decisions. The proposals were referred to by the FCA as “once-in-a-generation reforms” to help millions of people navigate their financial lives (see press release here). 

“These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.”

Sarah Pritchard, deputy chief executive of the FCA

This consultation follows the 2023 HM Treasury (HMT) and FCA discussion under the Advice Guidance Boundary Review on how the FCA could better support consumers to make informed choices about their pensions and investments (see our previous blog post). The FCA consulted on proposals for targeted support in pensions (see here) in December 2024 and is now taking forward more detailed proposals for both pensions and retail investments. To help develop its policy, the FCA has also carried out consumer and behavioural research and a “policy sprint” with certain firms considering the provision of targeted support.

Key takeaways

The FCA is of the view that targeted support would currently fall within the existing definition of “personal recommendation” as set out in article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO).  

However, given that existing requirements relating to providing personal recommendations make it difficult for firms to establish appropriate models for targeted support, the offering of targeted support will need to be regulated differently with a bespoke set of conduct standards and a dedicated authorisation gateway. 

To enable this, HMT announced on 30 June 2025 that the government will publish a policy note setting out proposed amendments to the RAO to create a new regulated activity of targeted support. This policy note, together with the draft statutory instrument, will be published alongside the Chancellor’s Mansion House speech on 15 July 2025.

When delivering targeted support, the FCA is proposing that firms must make it clear that the suggestion is designed at scale for a group of people with common characteristics, based on limited information, and that it does not constitute individualised advice. Targeted support should be designed to help consumers achieve “better outcomes” than if they had not received such support.

The new framework will be underpinned by the Consumer Duty and existing product governance rules, but the FCA has also proposed new outcomes-focused conduct standards that give firms flexibility to design their offering within certain defined parameters. Among other things, firms will  need to have effective processes in place for monitoring customer outcomes, regular service reviews, appropriate identification of target markets, pre-launch testing and the development of effective customer journeys. Firms can offer targeted support proactively or reactively to their consumers, but the FCA expects it to be a free service in most cases.

The FCA does not intend to change the current regulatory framework for activities that can be provided as guidance without FCA authorisation. As such, firms providing guidance services can continue to do so without FCA authorisation. However, the FCA is proposing to consolidate, simplify and clarify existing guidance on the distinction between providing information and guidance versus offering various forms of advice. A consultation paper on these proposals is expected to be published in January 2026.

Simplified advice

The FCA is also consulting on proposals relating to simplified advice which, by contrast, is a one-off personal recommendation focusing on an individual consumer’s specific needs and circumstances. At this stage, the FCA is requesting feedback on the specific advice and suitability requirements that should be considered or modified in order to give firms confidence to offer simplified advice whilst ensuring appropriate consumer protection. 

The FCA is planning on creating a clearer distinction between simplified and holistic advice. This will enable simplified advice to complement targeted support where a consumer has specific individual needs by taking account of essential information relevant to that need. It may also provide a stepping stone to the more complex holistic advice for consumers with greater wealth and more complex circumstances.

Next steps

Given the detailed work carried out to date, the consultation is subject to a relatively short 8-week consultation period closing on 29 August 2025. The FCA will separately consult on any consequential changes arising from the proposals later this year. The aim is to publish a policy statement with final rules by the end of 2025. The authorisation gateway is expected to open in March 2026.

Firms should consider the expected impact of the proposals on their business and clients, including how they will meet the conditions for authorisation to provide targeted support and their plans for implementation of the new regime.