Target Support is coming – FCA publishes final rules and guidance

The FCA has published near final rules and guidance for the delivery of targeted support to retail consumers. These are designed to be outcomes-focused, flexible and future-proof, ensuring consumers are protected whilst also preserving a degree of latitude for firms to innovate. 

The background to this publication can be found in our earlier Passle here.

The Government has confirmed that targeted support will be a new regulated activity - firms will need to be authorised/vary their permissions before they can provide it. 

The ICO has also published a joint statement with the FCA addressing the interaction between offers of targeted support and the rules governing direct marketing.

The new rules will be finalised and take effect on 6 April 2026. The gateway for applications to vary permissions where an authorised firms wishes to offer targeted support is on track to open in March 2026. Once operational, the FCA estimates that at least 18m people could be offered targeted support within a decade.

The targeted support framework

The basic structure for a targeted support offering remains as consulted upon earlier this year. Firms will need to develop:

• Pre-defined “situations” in which they can provide targeted support.
• Pre-defined consumer ‘segments’, that is, groups of consumers in a common situation and, where relevant, sharing common characteristics, with sufficient granularity that they are neither too broad nor too individualised. Firms may use assumptions to limit the number of common characteristics used to define a segment, but must assess the suitability of any ‘suggestion’ by reference to the common characteristics of a segment (not by any assumptions).
• A pre-defined ‘suggestion’ for each customer ‘segment’ within a ‘situation’. The FCA has confirmed that the suitability of each suggestion does not need to be assessed at the individual customer level – it must instead be suitable for the segment as a whole. The rules will prohibit firms from providing a consumer with a suggestion if there is information of which they are aware, or of which they ought reasonably to be aware, that indicates that the relevant ready-made suggestion may be unsuitable.

Communications about targeted support must enable consumers to understand:

• the nature of targeted support including that it is based on limited information and therefore that it is not individualised advice;
• the characteristics of the segment to which a consumer has been allocated and any assumptions that the firm has made about individuals in that segment; and
• where relevant, specific requirements around ready-made suggestions.

The FCA is not providing examples of best practice communications, to encourage firms to identify engaging and innovative ways to communicate with customers. Information must be provided in a durable medium at the time targeted support is given, or as soon as reasonably practicable afterwards. Firms have flexibility to determine the most appropriate durable medium.

Charging

Firms may charge for targeted support or provide it free at the point of access. Under the Consumer Duty, they will have to assess the value of the targeted support service they provide. Cross-subsidies – either between business lines or from other legal entities in the same group – will be permissible. Firms will also be permitted to accept payments from affiliate companies, provided these are reasonably representative of the costs of providing targeted support. The inducement rules in COBS 2.3 and 2.3A will apply to firms making or receiving intra-group payments for targeted support. The FCA recognises that this may advantage larger, vertically integrated firms.

The FCA has introduced a new rule requiring firms to disclose, by at least the time a ready-made suggestion is communicated to a consumer, where the costs and charges associated with a product differ depending on whether it is accessed through targeted support (compared to a different route). The ban on commissions remains, save for a limited exception for commissions received from providers of annuity brokerage services.

Appointed Representatives will not be able to offer targeted support, although this will be reviewed in future.

Changes to the final framework

The FCA has revised its initial proposals in several key areas, including:

• Amending rules and guidance on consumer segments to prevent firms using a level of detail that would broadly be associated with the consideration of a consumer’s characteristics/ circumstances by a firm providing investment advice.
• Permitting firms to direct consumers to whole-of-market annuity brokerages and removing the requirement for a break between targeted support and annuity sales journeys.
• Simplifying rules and guidance on firms’ obligations for ongoing monitoring of targeted support services, recognising the one-off nature of targeted support and confirming that firms will not need to check the suitability of suggestions on an ongoing basis or monitor individual customer outcomes after a ready-made suggestion has been given.
• Introducing a new disclosure requirement that firms must label the service as 'targeted support' when delivering a ready-made suggestion.
• Removing the proposed requirement for firms to ensure that consumers understand the basis on which firms are remunerated for their provision of targeted support – a positive development given the practical difficulties this would have presented for firms.

The FCA had originally proposed a purpose statement for targeted support which stated that it should deliver ‘better outcomes’ for customers than if targeted support had not been provided. Use of ‘outcomes’ in any form in a retail context risks confusion with firm obligations under the Consumer Duty. Following feedback, the FCA has replaced ‘better outcomes’ with ‘better position' to avoid confusion and better reflect its policy intention.

Vulnerable customers

The FCA has maintained its requirement that firms pre-define ‘excluding characteristics’ that prevent a customer from aligning with a segment. It continues to recognise the risk that this practice excludes vulnerable customers from targeted support offerings, as characteristics that might render targeted support inappropriate correlate strongly with characteristics of vulnerability and/or protected characteristics. It will continue to encourage (but notably not require) firms to consider creating new consumer segments specifically for customers with excluding characteristics, or to signpost excluded customers to other sources of support (e.g. MoneyHelper). While the FCA accepts this will not always be possible, it expects firms to have a clear rationale for not doing so.

Complaints

The complaints handling rules and guidance in DISP will apply to complaints about the provision of targeted support. The FCA also recognises that firms want clarity around how the FOS and FCA will assess complaints, as misalignment between the two could act as a significant barrier to firms offering targeted support. It points to a joint statement with the FOS (published the same day) and emphasises provisions in the July 2025 MOU between the two organisations that provide a framework for resolving complaints with wider implications.

Direct marketing and communications

Feedback confirms that many firms still consider the existing direct marketing rules to be a significant barrier to their ability to provide effective targeted support. In addition to the joint statement with the ICO referenced above, the FCA notes that the Government has committed to enacting secondary legislation to enable workplace pension providers to deliver targeted support communications to members who have not opted out of direct marketing.

The ICO statement itself containes some useful examples of how firms might communicate with customers about targeted support, both where there is a soft opt-in and where customers have opted out entirely. It remains the case, however, that opting out of direct marketing will inevitably restrict the extent to which a firm can promote its targeted support offering amongst its customers.

The FCA will consult on simplifying its rules on investment advice and guidance in early 2026.