FCA Publishes Near-Final Rules for Targeted Support in Pensions and Investments

The FCA says in the policy statement that around 23 million consumers are currently underserved by the markets for advice and guidance, and that only 9% of adults received regulated financial advice about investments, pension saving or retirement planning in the 12 months to May 2024. It estimates that at least 18 million people could be offered targeted support within a decade.

What the rules require

Firms must identify consumer segments with shared financial support needs or objectives and deliver suitable ready-made suggestions to them. They must explain the nature and limitations of targeted support and the common characteristics of the segment, label the service as targeted support when giving a suggestion, apply existing product governance rules and regularly review the outcomes of the service. Firms will not have an ongoing responsibility for individual suitability.

Following 116 responses to its June consultation and 20 to a later one, the FCA made several changes. These include limiting the level of detail firms may use in defining segments, allowing firms to direct consumers to whole-of-market annuity brokers, simplifying ongoing monitoring requirements and removing a proposed rule on explaining how firms are paid.

Timing

The rules are near-final because the government must first make targeted support a new specified activity under the Regulated Activities Order. Once that legislation is laid, the FCA Board will be asked to make the final rules, which the FCA expects to take effect from 6 April 2026. Firms can use its pre-application support service before the authorisation gateway opens in March 2026.

Who is affected

The regime is relevant to pension providers, investment platforms, wealth and fund managers, banks and building societies that want to help customers who do not take full advice. The FCA also published joint statements with the Financial Ombudsman Service on complaints and with the Information Commissioner's Office on direct marketing rules.

Sources

• Financial Conduct Authority: PS25/22 Supporting consumers' pensions and investment decisions, rules for targeted support
• Financial Conduct Authority: PS25/22 policy statement (PDF)