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FCA sets out new ‘targeted support’ advice model

FCA sets out new ‘targeted support’ advice model

The FCA has proposed a major reform to investment guidance. A new ‘targeted support’ category would let firms give low-cost prompts to consumers without breaching advice rules, aiming to address a gap that leaves millions without affordable help.

The UK’s financial regulator has unveiled sweeping proposals to expand access to investment guidance, introducing a new category of “targeted support” that would enable financial services firms to issue tailored prompts to customers without offering full regulated advice.

The Financial Conduct Authority (FCA) published Consultation Paper CP25/17, calling the plan “a once-in-a-generation reform” to close the retail advice gap. The move is the biggest shift since the 2012 Retail Distribution Review and is designed to help the millions of Britons who do not currently pay for investment advice due to high costs or limited access.

Under the proposals, providers such as banks, insurers and pension firms could send “ready-made” nudges to groups of consumers — for example, those sitting on large cash balances or underfunding their pensions — without triggering the same regulatory obligations as personalised advice. Suitability checks would not be required, but the FCA insists the distinction from full advice must remain clear.

The regulator estimates more than 7 million UK adults hold over £10,000 in cash that could be invested, and up to 30 million people may benefit from easier access to low-cost support. Around 100 firms are expected to offer targeted support when the framework launches, according to coverage by Reuters.

FCA executive director Sarah Pritchard said the new regime would “help people navigate their financial lives and give them greater confidence to invest.” The industry response has been broadly positive, with Hargreaves Lansdown, Vanguard, and AJ Bell supporting the plan. Consumer groups have urged caution and called for strict boundaries to prevent mis-selling.

The consultation runs until 29 August 2025, with final rules expected by December. The first forms of targeted support could be introduced from April 2026, pending parliamentary amendments to the Financial Services and Markets Act to create a dedicated authorisation pathway.

The changes follow years of warnings that only around 9 per cent of UK adults pay for professional financial advice — often because it is targeted at high-net-worth individuals. The reforms are also seen as part of a broader effort to meet the FCA’s Consumer Duty obligations and steer savers away from unreliable social media guidance.

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BQ

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