‘Targeted support’ part of UK government’s Leeds reforms

The so-called Leeds reforms were announced by chancellor Rachel Reeves ahead of her speech on financial services at Mansion House in London on Tuesday evening.

As part of this raft of reforms, the government has published a policy note and draft regulations for ‘targeted support’ – a new type of regulated activity that aims to bridge the gap between guidance and financial advice. The proposals affect retail investments as well as pensions, so it is envisaged that, from April 2026, banks and financial institutions will be able to use targeted support to alert savers about investment opportunities.

The policy note (18 pages/ 310KB) outlines proposed changes to the Financial Services and Markets Act 2000 (Regulated Activities) Order ahead of the Financial Conduct Authority (FCA) rolling out this new type of support for UK consumers next year.

It also points to a range of activities that the government is already undertaking to boost the pensions market, including significant reforms to the UK’s defined contributions (DC) pensions and defined benefits (DB) schemes, and its efforts to develop a financial inclusion strategy to tackle barriers to individual and households’ ability to access affordable and appropriate financial products and services.

The policy note also indicates that the government is currently working with the Information Commissioner’s Office (ICO) and the FCA to explore policy options to deal with direct marketing rules that pose a potentially significant barrier to firms’ ability to provide ‘targeted support’. There is also potential for further ICO or FCA guidance or even legislative change to provide further clarity in this area.

As expected, the draft regulations (3 pages / 179 KB) would make ‘targeted support’ a new regulated activity requiring new or varied permission from either the FCA or the Prudential Regulation Authority (PRA). Under the proposals, the existing definition of “personal recommendation” remains unchanged, and guidance would continue to be an unregulated activity. The government is still considering whether transitional provisions or consequential amendments are required to ensure targeted support operates as intended.

The draft regulations are open for public comments until 29 August and run in parallel to the FCA’s own consultation on the draft rules for ‘targeted support’, which closes on the same date. The government has said that HM Treasury “intends to legislate in 2025, subject to feedback on the draft Statutory Instrument and when Parliamentary time allows.”

These moves to empower consumers to make more informed pension investment decisions are aligned with the government’s planned public rollout of pensions dashboards to make retirement planning easier.

Tom Barton, pensions expert at Pinsent Masons, said the recent developments marked the next step towards reforming the pensions market. “Things are starting to come together,” he said. “The dashboard should give people find and view access to their pensions – helping them take stock of their retirement savings and start to form views around income in retirement. High-net worths and the more affluent will take full-fat advice about retirement.”

Barton said ‘targeted support’ would “support those not currently well served by full-fat advice, giving them a lower cost, but less specific form of ‘help’.” 

He welcomed both the government’s and FCA’s consultations, saying they would provide an important opportunity for the government to gauge the industry’s views and concerns ahead of introducing this new type of regulated support for consumers. “’Targeted Support ‘plays a critical role in helping people optimise their retirement,” he said. “To make it work for industry as well as consumers / members, it would be helpful to have clarity – and better still certainty – about how the Financial Ombudsman Service (FOS) and regulators will handle claims, disputes and enforcement.”

The announcements on ‘targeted support’ come as the government also publishes its Financial Services Growth and Competitiveness Strategy (76 pages / 10.5MB) which pledges to introduce reforms to unlock DC pension investment in UK growth assets in the wake of a landmark pensions investment review.

The strategy report also outlines that there will be an industry-led advertising campaign highlighting investment opportunities to consumers and a review of risk warnings on investment products. The government says it also continues to consider potential reform to Individual Savings Accounts (ISAs) and savings to help consumers achieve the right balance between cash savings and investments. As an initial step towards this, from 2026 it will be possible to hold long term asset funds (LTAFs) in Stocks & Shares ISAs.

The chancellor welcomed the launch of a voluntary Employer Pension Pledge during the Mansion House event. This voluntary initiative, led by the Lord Mayor of London, commits employers to prioritising net returns as well as cost when selecting or reviewing DC pension providers, and to requesting more transparency from providers on private market allocations. Over 20 large employers have signed the pledge so far.