Pension providers are to be granted the ability to make recommendations directly to consumers under the Financial Conduct Authority’s (FCA) “targeted support” plans, which are set to go live next year.
The financial services watchdog announced today (11 December) that the targeted support regime would launch in April 2026, with applications opening to financial services firms from March. The launch dates are subject to legislation being passed by parliament.
Targeted support is designed to allow providers to suggest actions or products to groups of customers under certain circumstances, meaning they can give customers additional support with financial decisions. Suggestions and recommendations are subject to companies’ responsibilities under Consumer Duty, and should only be made if consumers are likely to be put in a better position, the FCA said.
“Targeted support will be game-changing. It means millions of people can get extra help to make better financial decisions.”
Sarah Pritchard, Financial Conduct Authority
The FCA estimates that “at least 18 million people could be offered extra help with their investments and pensions” over the next 10 years. Its research found that around seven million adults with £10,000 or more in cash savings “could be missing out on the benefits of investing throughout their lives”.
The regulator’s research also found that pensions were a particular point of difficulty for consumers. Three-quarters of defined contribution members aged 45 or over did not have a clear plan for how to take their money in retirement. Only 22% said they had a good understanding of their options at retirement.
The measures tie in with government efforts to encourage more individuals to invest, including through the Leeds reforms announced earlier this year. This month, the FCA called for feedback on how it can help “build a stronger investment culture” in the UK.
Sarah Pritchard, deputy chief executive of the FCA, said: “Targeted support will be game-changing. It means millions of people can get extra help to make better financial decisions.
“We also hope it will build greater confidence to invest. While investing will not be right for everyone, we know people in the UK invest less compared to the European Union or the US. People in the UK could be missing out on the potential benefits of investing in the medium to long term.”
Why the success of targeted support is so important
The Financial Conduct Authority is working on a ‘targeted support’ regime that could allow financial services providers to steer groups of consumers in certain directions. Fairer Finance’s Tim Hogg explains why getting this right is so important. Read the full article.
‘Significant step’ for helping unadvised savers
Targeted support has had significant backing from the industry ever since the FCA first proposed it in 2024, with commentators highlighting the importance of supporting savers with crucial financial decisions such as taking a pension.
“The FCA’s new rules mark a significant step towards closing the advice gap and will empower millions.”
Yvonne Braun, Association of British Insurers
Yvonne Braun, director of policy for long-term savings at the Association of British Insurers, said: “Targeted support has the potential to make a real difference to people’s financial lives.
“At a time when only 9% of people take regulated advice, targeted support will give people help they can rely on when making complex financial decisions. The FCA’s new rules mark a significant step towards closing the advice gap and will empower millions.”
David Brooks, head of policy at Broadstone, said the new regime could help “close one of the most persistent gaps in the UK pensions and investment system”.
“Empowering firms to give consumers clearer, more tailored nudges is a sensible and pragmatic step that should deliver better outcomes for more savers and investors,” Brooks added.
“Trustees of occupational schemes would be wise to keep abreast of targeted support developments, as it is likely that it will apply to the communications and support that they deliver to members.”
David Brooks, Broadstone
However, he emphasised that execution would be key to the success of targeted support. Brooks explained: “Firms will need absolute clarity on the advice/guidance boundary to support complex decision-making and to ensure that targeted support does not create new risks or uncertainty.
“Trustees of occupational schemes would be wise to keep abreast of targeted support developments, as it is likely that it will apply to the communications and support that they deliver to members.”
Research from Standard Life earlier this year found that consumers were broadly positive about the potential impact of targeted support, and saw it as a way to “whittle down” their options to those most relevant for their circumstances.
Cath Sermon, head of public engagement and campaigns at Standard Life’s Centre for the Future of Retirement, said the FCA’s announcement was “a positive step that will help ensure that savers don’t feel overwhelmed when making decisions around their pensions”.
“This is especially important as we found that even people with a good grasp of other financial areas in their lives, such as mortgages, often feel confused about pensions,” Sermon said. “This can lead people to feel anxious, overwhelmed, and worried about the risks of making uninformed decisions, but Targeted Support can help cut through these negative emotions.”
Alistair Brannan, EY’s life, pensions and personal lines leader, added that the launch of targeted support was “a clear signal” that financial services companies needed to do more to help guide consumers through decisions.
“More work is required as firms consider their targeted support solutions, and how quickly they can be brought to market,” he said. “The onus is now on providers across the banking, wealth and retirement sectors to consider how to respond.”
Brannan continued: “While the investment journey is clearly a critical one, clarity on how targeted support and wider reforms to pension rules will also help firms determine how they can better support the many customers at the point of retirement – a time when decisions taken can have significant and lasting implications.
