Leeds Reforms: HMT establishes the statutory framework for targeted advice

The Treasury has published a policy note and draft statutory instrument (the “Draft SI”) outlining proposed changes to the Regulated Activities Order 2001 (“RAO 2001”) required to bring the new ‘targeted support’ regime into operation. 

Targeted support is a key element of the response to the joint FCA and Treasury Advice/Guidance Boundary Review, which highlighted deficiencies in the support and advice available to users of financial services when managing their finances. This new regime is intended to improve the availability and affordability of the support available.

These Treasury proposals should be read in conjunction with the FCA’s most recent consultation on target support (CP25/17) – both are scheduled to close on 29 August 2025. The FCA’s CP provides further detail on the proposed design of targeted support and communications. For further detail on the FCA’s consultation, see our earlier blog posts here and here. 

In this blog post, we outline the key aspects of the Treasury’s proposals.

Amendments to the RAO 2001

The Draft SI outlines two key proposals: the inclusion of a new Article 55A in the RAO providing for a new specified activity known as ‘Providing Targeted Support’; and amendments to the scope of the existing specified activity of advising on investments set out at Article 53 RAO, to clearly distinguish this activity from the targeted support regime. Taking each key proposal in turn: 

1. Article 55A would permit firms to effectively make recommendations to groups or cohorts of their clients based on shared characteristics and circumstances. The recommendations will be made to clients as individually; however, they would be presented as being suitable to the individual based on them forming part of a cohort or group. 
2. The Treasury intends the existing specified activity of advising on investments and providing targeted support to be mutually exclusive. In its Policy Note, the Treasury indicates that targeted support would technically fall within the existing definition of a ‘personal recommendation’ set out in Article 53 of the RAO. To achieve clear differentiation, the Treasury is proposing to expressly exclude targeted support from the scope of the specified activity of advising on investments. 

To ensure that clients are clear about when they are receiving targeted support (as opposed to investment advice), the Draft SI proposes that certain disclosures be provided to clients, either at the time a recommendation is made or as soon as reasonably practicable thereafter. Under the new Article 55A(4), firms would be required to disclose to clients:

1. that the recommendation is not specific to the individual;
2. any characteristics or circumstances used by the firm as the basis for the recommendation; and
3. that the recommendation is not based on a comprehensive consideration by the firm of the individual’s characteristics and circumstances.

Scope of proposals

Consistent with the FCA’s CP25/17, the Treasury proposals are directed towards recommendations relating to investments and pensions only. Support relating to other types of products, such as mortgages and pure protection insurance, is beyond the scope of the current proposals. 

Impact on regulatory permissions 

Firms wishing to provide targeted support would be required to apply for permission to do so, irrespective of whether they possess existing permission to provide investment advice. Authorised firms will be able to do this by submitting a Variation of Permission application.

The Treasury notes that the proposals are not designed to expand the regulatory perimeter, so firms who currently provide services outside of the regulatory perimeter would be unaffected by the changes. 

Areas still to be clarified

The Treasury highlights several areas that remain under consideration, subject to comments from stakeholders – these include:

1. Transitional provisions and other consequential amendments: The Treasury is considering whether any transitional provisions or additional consequential amendments are required, including whether the exemptions which apply to the specified activity of advising on investments should apply to targeted support.
2. Appointed representatives: The Treasury is inviting feedback on whether Appointed Representatives should be permitted to provide targeted support.
3. Direct marketing rules: The Treasury acknowledges concerns raised regarding the ability of firms to proactively offer targeted support to clients under the current direct marketing framework (for further detail, see our previous blog post here). The Treasury does not offer any solutions, however, it confirms that they continue to work closely with the FCA and the Information Commissioner’s Office to explore potential policy options. 

Next steps and timing

The Treasury is seeking specific feedback on:

1. the extent to which the distinction between the proposed new activity of providing targeted support is sufficiently distinct to investment advice provided under Article 53;
2. the disclosure requirements; 
3. consequential amendments to other legislation and transitional amendments; and 
4. the delivery of targeted support by Appointed Representatives.

The deadline for providing feedback on the Draft SI is 29 August 2025. Subject to the feedback received and the general Parliamentary timetable, the Treasury intends to legislate in 2025.