Government take forward proposals for targeted support

This is part of the review of the regulatory boundary between financial advice and guidance.  The new regime – targeted support, will enable authorised firms to make recommendations that are designed for groups of individuals with similar characteristics.

The government believes that currently not enough people are able to access the help they need to manage their finances.  The policy paper quotes that fewer than 9% of UK adults received financial advice in the year to May 2024.   This leads to many people turning to informal and unregulated sources for guidance.   Targeted support aims to address this, essentially trying to bridge the gap between generic guidance and full holistic advice.

Target support aims to be of particular benefit for pension savers in respect of:

Individuals under saving for retirement.   Many people are not saving enough for their retirement and the new rules will allow firms to suggest higher contribution rates. Currently firms can only warn a customer that they may be under saving for their retirement. 

Individuals struggling with decumulation decisions.  Many people need more support to help with the complex decisions they need to make when they come to take their pension benefits. Currently firms can only provide factual information around decumulation options. Under the new rules a firm could provide further assistance by suggesting a specific option such as a drawdown product.

The new rules also aim to help those with substantial savings to consider investing in a appropriate investment product.

The Statutory Instrument creates a new specified activity of providing targeted support and sets out that when a firm provides targeted support it is not ‘advising on investments’ under article 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO).

Firms providing targeted support will be subject to bespoke conduct standards distinct from the requirements that apply to ‘advising on investments’ as the government’s aim is to make a clear difference between the two.   A firm will also need to apply to the FCA or the PRA in order to provide targeted support whether or not it has an existing permission to provide investment advice.  The government believes this is an important aspect in safeguarding targeted support – enabling the regulators to assess whether individual firms satisfy the conditions for providing the support.

Along side the introduction of targeted support the Financial Conduct Authority (FCA) is proposing to

·         Simplify its advice rules and guidance to create a clearer distinction between simplified and more holistic advice.  This aims to give firms confidence that they can provide simple, focused advice to customers with straightforward needs.

·         Improve existing guidance on the advice guidance boundary, to help firms better understand the opportunities they have to provide consumers with support that does not constitute advice.

Further detail on how targeted support, simplified advice and other forms of support can be found in FCA’s recent consultation (CP25/17).

The government have requested feedback on the draft statutory instrument with a deadline of 29 August 2025. Any comments should be sent to targetedsupport@hmtreasury.gov.uk. HM Treasury intends to introduce the legislation in 2025.