On 11 December 2025, the Financial Conduct Authority (FCA) published a policy statement (PS25/22), outlining near-final rules for a new regulatory framework on targeted support in pensions and retail investments. This marks a significant milestone in the UK government’s initiative to bridge the ‘advice gap’ and improve the availability and affordability of financial suggestions for consumers.
The new regime will enable authorised firms to offer ready-made suggestions to their retail clients that are designed for groups of consumers who share similar financial support needs, objectives or characteristics, helping them decide whether and how to invest or save for retirement. Unlike traditional regulated investment advice, targeted support does not require an individualised assessment of each consumer’s personal circumstances. Instead, recommendations are tailored to pre-defined consumer segments, making financial suggestions more affordable, scalable, and accessible to a broader population. Importantly, targeted support will be designated as a new specified activity under the Regulated Activities Order, meaning only authorised firms can provide this service.
Earlier this year, the FCA's proposals for targeted support were subject to public consultation, namely CP25/17 in June (which we initially reported on here and discussed in further detail in a related briefing) and CP25/26 in September (which we reported on here). Both consultations closed in August. In response to industry feedback, the FCA redefined its original proposals and we explore those changes in greater detail in this blog post.
A new regulatory framework
The FCA’s new regime covers the design, delivery and purpose of targeted support, including requirements relating to:
- Consumer segments: Firms need to identify consumers with shared financial support needs or objectives and, where relevant, common characteristics.
- Ready-made suggestions: Firms must design suitable recommendations for relevant consumer segments that will help consumers address their needs.
- Communications: Firms must communicate the nature and limitations of targeted support, as well as the common characteristics of the consumer segment.
- Product governance: Firms must comply with product governance rules.
- Monitoring and review: Firms must regularly review and monitor the outcomes of the targeted support service, but there is no ongoing individual suitability assessment.
“Better position” rather than “better outcomes”
One of the most notable changes to the FCA’s initial proposals is the amendment to its purpose statement. Originally, the FCA suggested that firms provide targeted support only where it would result in “better outcomes” for the client. The wording has now been revised to “better position” to address concerns that the original phrasing could be confused with the Consumer Duty requirement for firms to deliver “good outcomes” for retail customers. By adjusting the terminology, the FCA clarifies that targeted support is not a substitute for full advice but rather a means of placing consumers in a stronger position to make informed decisions. However, the Consumer Duty still underpins the regime and firms that provide targeted support will continue to be expected to comply with it.
Granularity of consumer segmentation
The FCA also refined its approach to pre-defining consumer segments, which is a core feature of targeted support. Industry feedback highlighted concerns about ambiguity over what constitutes “sufficiently granular” segmentation. In response, the FCA has sought to clarify that while firms must identify groups of consumers with shared financial needs or objectives, this process should not involve a level of detail comparable to a comprehensive assessment of individual circumstances. This distinction is essential to preserving the boundary between targeted support and regulated investment advice, ensuring firms do not inadvertently cross into the advice territory. The FCA is expected to publish further details to assist firms with making judgements around the granularity of consumer segments.
Annuities: more flexibility on support and referrals
The FCA has adopted a more flexible stance on annuities. Under its initial proposal, firms were prohibited from recommending or quoting specific annuities and were required to impose a mandatory break between providing targeted support and continuing the annuity purchase process. Following consultation feedback, firms will now be able to direct consumers to whole-of-market annuity brokerages (after first directing the consumer to the MoneyHelper tool), provided this is done following the end of the targeted support journey and customers have been given a fair opportunity to consider their options first. The mandatory break requirement has been removed. Instead, firms must clearly inform consumers when the targeted support journey ends and that any subsequent steps form part of a new sales process. Referral payments from annuity brokerages will now be permitted, subject to existing inducement and transparency rules.
Simplified rules for ongoing review and monitoring
Monitoring obligations have been simplified to reflect the one-off nature of targeted support. The FCA recognises that ongoing monitoring requirements designed for continuous services would be disproportionate in this context. Firms are not required to re-assess individual suitability or track market performance for each recommended product. Instead, firms are expected to review their targeted support services regularly and assess significant product adaptations at a segment level (rather than the individual level) to ensure the service remains suitable for the pre-defined consumer segment. The FCA considers that the risk of harm to individual consumers is mitigated by existing product governance rules and the Consumer Duty requirement to take appropriate actions if a risk of consumer harm becomes foreseeable.
Enhanced disclosure and new labelling requirement
Disclosure requirements have been strengthened and firms will need to think carefully about how they describe their service. While the FCA previously suggested that firms could use the term “targeted support”, it is now mandatory for firms to explicitly label the service as “targeted support” when providing ready-made suggestions. This change aims to enhance transparency and customer understanding, making it clear that the service does not constitute personalised advice.
Adjusted rules on costs, charges and remuneration
The FCA initially proposed that firms must ensure consumers understand the basis of their remuneration, including any cross-subsidisation. However, industry feedback suggested that this requirement could create confusion and add unnecessary complexity without delivering meaningful benefits. As a result, this requirement has now been removed. Instead, firms must disclose if product charges vary depending on whether a customer accesses the product through targeted support or another route.
The rules relating to cross-subsidisation have also been narrowed so that firms can only accept payments from ‘affiliated companies’, rather than the previously proposed ‘associates’, which is a broader term. Firms may charge for targeted support or offer it free of charge, but all relevant fees and charges must still be disclosed and agreed with the customer before the service is provided. As noted above, referral payments for annuity brokerage signposts will be permitted, subject to existing disclosure and inducements requirements.
Revised mandatory signposting requirements
The FCA has revised its proposals on signposting. Where firms cannot provide a ready-made suggestion, they are expected to signpost consumers to suitable alternative support, such as MoneyHelper, but there is no expectation for proactive outreach if targeted support has not been sought or offered.
In respect of pensions, concerns had been raised that mandating signposting to targeted support would be premature. As a result, the FCA has scaled back requirements by instead requiring that consumers are signposted to the MoneyHelper website and postponed full implementation until 2027.
Joint statements with FOS and ICO: complaints handling and direct marketing
Alongside its policy statement, the FCA has issued a joint statement with the Financial Ombudsman Service (FOS), clarifying how complaints related to targeted support will be handled. Complaints can be referred to the FOS and eligible claims will fall under the Financial Services Compensation Scheme. As part of the joint statement, the FOS acknowledges the many differences between targeted support and other forms of investment advice. The statement also describes how the two organisations intend to work together, including with respect to referrals to the FCA where issues with wider implications are identified.
The FCA has also issued a joint statement with the Information Commissioner’s Office, setting out compliance considerations relating to the interaction between targeted support and the direct marketing rules under data protection law. The statement details how firms can communicate with their customers to provide information about targeted support services. Whilst the additional clarifications and examples given will likely be helpful, firms may find it challenging to walk the line of compliance with direct marketing rules and the desired business approach to marketing the new offer. In response to industry feedback, HM Treasury will also advance secondary legislation to enable workplace pension providers to communicate targeted support to members who have not opted out of direct marketing, which will increase the number of pension savers firms can provide proactive targeted support to.
Implementation timeline and next steps
With near-final rules now published, firms have a window to prepare for the implementation of the new regime. From March 2026, firms will be able to apply for the new targeted support permission, ahead of the new regime taking effect (subject to legislation). The FCA expects the new rules to come into force from 6 April 2026. In the meantime, its pre-application support service (PASS) will be available to assist firms preparing their permission applications. The government will introduce the relevant statutory instrument, The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2026, as soon as parliamentary time allows. The FCA does not anticipate significant changes before finalising the rules, though minor amendments may be made to reflect legislative progress.
The introduction of targeted support marks a significant step toward widening access to financial guidance and helping consumers make informed decisions about savings and investments. Firms should carefully review the new framework, start developing their consumer segment strategies, and take advantage of available FCA support where required to ensure readiness for go-live.
