FCA fires the starting gun on targeted support

What does this mean?

Targeted support is a new form of support that sits between full financial advice and guidance. It is designed to provide recommendations to groups of consumers with shared financial needs, without conducting a full individual assessment. 

The FCA has designed a new regulated activity of ‘providing targeted support’, subject to future legislative changes to the Regulated Activities Order (RAO). Firms will need to apply for permission to offer targeted support once the gateway opens in March 2026, with rules expected to come into force on 6 April 2026.

Firms will be allowed to make ready-made suggestions for groups of consumers with shared financial needs or characteristics, without triggering the rules for individualised financial advice. The support is not based on a full individual assessment, but still subject to governance, monitoring, and product governance expectations.

Key elements of the framework

• Consumer segmentation: Firms must pre-define segments based on common financial needs and characteristics. Segments must be ‘sufficiently granular’ but not overly individualised.

• Ready-made suggestions: Suggestions must be suitable for the segment and comply with Consumer Duty. Assumptions are permitted, provided they are not material to the suitability of the suggestion.

• Monitoring and governance: Firms must monitor outcomes, maintain product governance, and regularly review their service. However, there is no obligation to track individual customer outcomes. 

• Communications and disclosure: Firms must clearly label support as ‘targeted support’, explain the nature of the service, segment characteristics and limitations.

• Remuneration: Commission is broadly banned, but firms can recover costs via cross-subsidisation but must meet Consumer Duty fair value requirements.

Changes to previous consultations

The FCA has made some changes to the rules in response to feedback. Of particular interest is the requirement that the consumer segments must not be so detailed that they resemble individual advice.   

The FCA and FOS (and the ICO) have also published statements attempting to offer comfort to providers as to the treatment of targeted support in the event of complaints.

The FCA has also:

• Reworded a firm’s obligation from ‘better outcomes’ to ‘better position’ to avoid confusion with the Consumer Duty’s ‘good outcomes’ test.
• Removed retrospective monitoring of whether a consumer acted on a suggestion.
• Allowed firms to refer consumers to whole-of-market annuity brokers, though not within the same interaction.
• Introduced a requirement to label the service as ‘targeted support’ in all consumer-facing suggestions.
• Removed requirement for firms to disclose how they are remunerated for their provision of targeted support.

Links to other policy initiatives

There are a range of other linked policy areas, which firms must also consider in the context of targeted support. These include existing topics such as the new Consumer Composite Investment rules, the broad Consumer Duty agenda and pension dashboards.

However, there are other upcoming issues, including the simplified advice review where FCA intends to consult in early 2026 on simplifying existing advice rules, including clearer standards for non-holistic or low-cost advice, the FCA’s future publication of consolidated perimeter guidance to clarify the boundary between advice, guidance and targeted support, and the consultation on adapting requirements for a changing pensions market, which was also published on 11 December 2025. 

What do firms need to do?

Firms which want to offer targeted support have already started preparations. The final rules now provide the opportunity to implement plans and prepare for authorisation or permission variations in Spring 2026.

More broadly, every firm must consider strategically whether this is a service they want, or need, to offer. Many firms with large legacy back books, retail FS businesses who withdrew from full financial advice in 2012, and new tech entrants, with aspirations around Open Finance will all be active in targeted support; this competitive landscape means no firm can simply ignore the opportunity this presents.

For firms embracing target support, they must:

• Plan for gateway authorisation: Firms must apply to vary their permissions once the new activity is legislated. Early engagement via the FCA’s Pre-Application Support Service (PASS) is encouraged.
• Develop and test support journeys:
  • Design robust segmentation models and maintain clear criteria for including/excluding characteristics.
  • Ensure ready-made suggestions are suitable, and assumptions are non-material to that suitability.
  • Build clear consumer-facing communications and label services correctly. 

• Enhance governance and monitoring:
  • Assign internal oversight, including Board-level accountability.
  • Integrate product governance, Consumer Duty expectations, and risk management into the service.
  • Prepare for monitoring of aggregate service outcomes – but not individual follow-ups.

• Review systems and processes:
  • Ensure infrastructure can deliver suggestions in a durable medium.
  • Implement audit trails, Firms which want to offer targeted support have already started preparations. 

• Prepare for reporting and record-keeping:
  • Set up internal processes to meet FCA’s planned data collection from 2026 onwards.
  • Maintain segment-level documentation, governance and testing evidence.

• Engage on future impact: 
  • Subsequent work on pensions consolidation and simplified advice will interact with this regime, so firms need to think ‘big picture’ about how this will work longer-term.

Next steps

Legislation to create the new regulated activity is expected in early 2026, with the FCA’s gateway for applications opening in March 2026.

The final rules are expected to take effect from 6 April 2026, in time for the commitment to the 2026/7 ISA season.