Shaping the regulatory landscape for targeted support: FCA consults on consequential Handbook changes to support the new regime

On 26 September 2025, the Financial Conduct Authority (FCA) published a consultation paper (CP25/26) setting out additional changes to its Handbook to further integrate the new regime for targeted support into the existing regulatory landscape. This follows an earlier FCA consultation on detailed proposals for targeted support for pensions and retail investments (CP25/17), which we initially reported on here and discussed in further detail in a related briefing. 

In this blog post, we provide a high-level breakdown of a number of key changes proposed in CP25/26 and highlight certain areas firms should consider when implementing the necessary adjustments to their businesses. 

Strengthening internal governance and controls 

To ensure proper design, delivery and oversight of targeted support, staff involved in the provision of targeted support must possess the necessary skills and expertise to effectively deliver the service. It is therefore proposed that firms must ensure the requirements for employee competence and knowledge align with the existing standards for offering personal recommendations and MiFID-derived activities.  

For the purposes of preparing management responsibilities maps under the Senior Managers and Certification Regime (SMCR), the FCA is proposing to add targeted support to the list of examples of the business activities and functions of an SMCR firm to ensure clear organisational structures and accountability for overseeing targeted support.

Enhancing consumer protection and communication 

The FCA has proposed various amendments to its Conduct of Business Sourcebook (COBS) to align the provision of targeted support with existing client protection standards and clarify how existing COBS rules will apply to targeted support. 

Reliance on other firms 

Where a firm is required to carry out a suitability assessment under COBS 9A, the FCA considers it inappropriate for the firm to rely on any targeted support provided by another firm under COBS 9B. In contrast, where a firm is required to perform an appropriateness assessment under COBS 10/10A, the FCA is seeking feedback on any situations where such reliance might be appropriate. 

Charging and remuneration 

To recover the costs of providing targeted support, firms will be allowed to accept payments made by or on behalf of a client. The FCA has clarified that permitted payments include those that facilitate the payment of a charge for the provision of targeted support. Firms will also be allowed to cross-subsidise the provision of targeted support by accepting intra-group payments that are “no more than is” reasonably representative of the costs of providing targeted support. The proposed rules also permit a combination of explicit charges and partial cross-subsidisation for firms to recover their service costs. Consistent with earlier proposals, the FCA has clarified that firms can meet costs through other business lines or legal entities.

Regarding remuneration, the requirement for clients to understand how a firm is remunerated for providing targeted support will extend to all clients, regardless of whether or not explicit charges are levied for targeted support. This is designed to ensure consumers can consider how financial arrangements might impact the service and make informed decisions. The FCA is continuing to consider whether the overall approach to disclosure is appropriate and the extent to which the Consumer Duty and other existing requirements are sufficient to address any potential harm flowing from remuneration arrangements. This may include a consideration of possible conflicts arising from a firm’s arrangements. 

In addition, the non-MiFID inducement rule in COBS 2.3 will be amended to mandate the disclosure of the existence, nature and amount of relevant inducements to clients when providing targeted support. This is consistent with the FCA’s existing approach to inducements when giving a personal recommendation in relation to a retail investment product and ensures consumers receive an indication of remuneration early in the sales process. Proposed guidance will clarify the interaction between requirements around inducements and the draft rules in COBS 9B. Moreover, the FCA is proposing to prohibit issuers and product providers from offering or paying commissions (or other payments or benefits) in relation to targeted support to prevent the burden of the restriction from falling solely on firms providing targeted support. 

Product information 

The requirements in COBS 14 for providing objective and relevant information about a life policy will explicitly extend to providing targeted support. In addition, where COBS 14 requires a firm to provide a key features document or a key features illustration, this will apply where the client receives a ready-made suggestion, as well as where a personal recommendation is provided. Furthermore, COBS 14 Annex 1 will be amended to reference targeted support charges where levied to ensure any costs are shown upfront and included in the Lifetime ISA estimates. 

Pensions communications

The FCA expects firms to suggest that consumers consider targeted support alongside other guidance and advice options. It is proposed that annual statements from operators of personal pension schemes and retirement and buy-out annuity contracts must now signpost consumers to targeted support and include any related charges. Where a firm does not offer targeted support for free, any charges must be included in the written statement accompanying costs and charges information. 

Streamlining existing reporting requirements

The FCA is proposing to adapt existing reporting forms to capture data on customers who receive targeted support. It is not proposing to introduce any new reports specifically for targeted support. Changes will include that sales made through targeted support should not be reported in the “advised” category but rather within a broadened “non-advised” category. By distinguishing the categories in this way, the FCA is intending to achieve a clearer view of the products sold to consumers. Similarly, data on consumers who have received individualised advice will be separated from consumers who have received targeted support in retirement income regulatory returns.

Next steps

The consultation will close by 17 October 2025, following which the FCA is aiming to publish a policy statement together with the final rules in December 2025 and open the authorisation gateway in March 2026. 

Firms are reminded that, despite the short consultation period, the FCA does not propose to introduce any transitional arrangements for the proposed changes. Firms are expected to implement the necessary adjustments to their internal and client-facing processes between the publication of the final rules and the opening of the authorisation gateway. 

Whilst the FCA does not expect all firms to offer targeted support, it is keen to help those who want to do so to get ready quickly. The FCA’s voluntary pre-application support service (PASS) has been extended to firms planning to apply for the regulatory permission, and is aimed at helping firms prepare high quality applications and facilitate faster assessments. This is consistent with the FCA’s aim of ensuring targeted support can be delivered quickly to facilitate wider access to financial support, supporting further innovation and growth while maintaining strong consumer protection.