FCA publishes near-final rules on targeted support

The FCA has published its near-final rules for targeted support following a consultation earlier this year. The rules mean that, once the relevant legislation is in place, firms will be able to apply for permission to provide this support: effectively suggestions for groups of consumers who share common characteristics as distinct from personalised financial advice.

The FCA estimates that at least 18 million people could be offered targeted support by firms to help them with their investment and pension decisions through the service over the next 10 years.

Firms would target recommendations at groups of consumers with shared characteristics, aiming to support them in their decisions about how to invest their financial resources or make important choices about their pension.

Elizabeth Budd, a financial services regulation expert at Pinsent Masons, said the move could provide greater encouragement to invest by those who have the resources to do so.

“Targeted support is not a cure-all,” she said. “But it does provide a useful lever to be pulled to encourage better and more investing by those with a reasonable level of savings.”

The authority said the recommendations from firms via targeted support would be ready-made suggestions suitable for the consumer group targeted by the firm, with the aim of putting those consumers in a better financial position, although they would not be receiving in-depth individual assessments.

The FCA claimed less than one in 10 people in the UK have received regulated financial advice, and the watchdog’s Financial Lives 2024 survey found three quarters of defined contribution pension-holders aged 45+ have no clear plan for how to take their money.

With as many as seven million adults in the country with £10,000 or more in savings who could be missing out on the benefits of investing, “the need for better support is stark”, the FCA said.

Alongside the targeted support scheme, the FCA also published joint statements with the Financial Ombudsman Service and with the Information Commissioner’s Office setting out more detail about providing support without being in breach of marketing and privacy rules.

“HM Treasury has also today published the necessary draft legislation to introduce the new regulated activity of providing targeted support,” added Budd.

“In addition, the ICO has also made it clear in a joint statement with the FCA how firms can provide targeted support without breaching direct marketing and the Privacy and Electronic Communications Regulations.

“The joint statement of the Financial Ombudsman Service and the FCA is also helpful to clarify the different approach required in comparison to investment advice, although perhaps more vague than firms were wanting.

“These help to address some of the very real concerns that firms have had on the practicalities of implementing targeted support.”

The FCA’s pre-application support service (PASS) is open to firms considering applying for the targeted support permission. It expects to open the application gateway for firms to apply for the targeted support permission from March 2026, subject to legislation.  

The move comes amid a UK government drive to encourage more investment by consumers, with changes to ISAs announced in the budget aimed at encouraging savers to look to stocks and investment opportunities.

Sarah Pritchard, deputy chief executive of the FCA, said the new service would be game changing for millions of UK residents.

”'We also hope it will build greater confidence to invest,” she added. “While investing will not be right for everyone, we know people in the UK invest less compared to the EU or US. People in the UK could be missing out on the potential benefits of investing in the medium to long term.”