The FCA is rethinking how firms should support consumers with investment and pension decisions. We break down the key takeaways from CP25/17, including the mechanics of ‘targeted support’ and what firms will need to do to get ready.
Pensions and retail investments allow people to build wealth and provide income for later life; however, a significant proportion of people in the UK are not in a financial position to consider these options. The FCA’s Financial Lives 2024 survey found that over 30% of people had less than £1,000 to draw on in case of emergency. And, for those who are fortunate enough to be able to invest, the FCA has found that there is an advice gap in the support available.
Decisions to invest are often complex, and a large proportion of the population who are able to do so are not in a position to pay for advice. The Financial Lives 2024 survey also found that people were instead having to resort to other sources of information, with a significant portion of younger investors resorting to social media influencers and bloggers for their research.
The FCA has identified that this lack of support available has the potential to cause harm. Many people with investible assets held solely in cash are not acting as they feel they do not have the knowledge or support available. The FCA also found that a number of investors turned to higher risk investments, such as cryptoassets, even when these might not be suitable for them.
Introducing Targeted Support
In this Consultation Paper (CP25/17), the FCA is introducing the concept of targeted support. This would allow firms to provide suggestions designed for groups of consumers with common characteristics, with the aim of helping these consumers to make better-informed choices.
Targeted support could be provided at the request of a consumer or at a firm’s own initiative. It would be based on limited information, with firms being required to make clear that the suggestions are not tailored to each consumer’s specific needs. The FCA stated that it understands that this would not be as beneficial as a personal recommendation; however, it also stated that this is a trade-off it is willing to make to reduce customer harm through the absence of any support.
Examples provided by the FCA of what targeted support could look like include:
- Consumers under-saving for retirement: Currently, firms can warn a consumer that they may be under-saving for retirement. Under targeted support, a firm could suggest an alternative pension contribution rate.
- Consumers in a position to invest: Currently, firms can suggest that consumers may be in a position to start investing. Under targeted support, a firm could suggest a specific investment product for a consumer.
- Consumers with investment products: Currently, firms can provide information about investments consumers hold, for example to highlight risks and signpost to explanatory materials. Under targeted support, a firm could suggest an alternative investment product.
Firms would be expected to pre-define the situations where they would look to provide targeted support, as well as the consumer segments and the ready-made suggestions applicable to each segment.
When defining a consumer segment, firms would need to consider characteristics that align a consumer with that segment, and those that would prevent a consumer from being aligned with a segment – these are “including characteristics” and “excluding characteristics”. Reasonable assumptions about consumers in a given segment can be made when developing suggestions.
The FCA is not prescribing how targeted support communications should look; however, there is a requirement for firms to communicate the common characteristics of the pre-defined consumer segment, making it clear the suggestion was based on these characteristics. Firms would also need to make clear any limitations on the scope of products of services considered by the firm, for example, if the firm had only considered its own product offerings.
In line with the Consumer Duty rules, firms providing targeted support would still need to act to deliver good outcomes for consumers. The FCA has proposed that, when providing targeted support, firms would need to treat all recipients as retail customers.
Simplified Advice
The FCA sees targeted support as a potential stepping stone towards simplified, or even more comprehensive, advice.
The aim for simplified advice is to “give firms confidence that they can provide simple, focused advice to customers with straightforward needs at a lower cost.” Whereas targeted support is intended to support groups of people with similar characteristics, simplified advice focuses on a consumer’s specific needs and must be assessed for suitability.
The FCA has stated that it would look to bring forward a further consultation paper on simplified advice early in 2026, after the publication of the policy statement on targeted support.
Authorisation
Firms looking to provide targeted support would need to apply to the FCA for a new specific Part 4A permission, with the FCA advising that it would specifically look into the following:
- How firms would identify customers who might benefit from targeted support;
- How firms would conduct their initial segmentation of consumers and ensure individuals align with these particular segments, and how they would develop suitable suggestions for each segmented group;
- Evidence that firms have developed a clear end to end customer journey for targeted support and conducted testing to ensure it will operate as intended; and
- Evidence that firms have adequate systems and controls in place to deliver targeted support effectively and comply with FCA rules on an ongoing basis.
Next Steps
The deadline for feedback to this Consultation Paper is 29 August 2025, with the FCA aiming to publish its policy statement on targeted support by the end of 2025.
How Thistle Initiatives Can Help
We help firms navigate FCA change with confidence. Whether you're assessing your approach to targeted support, preparing for new permissions, or refining customer journeys, our regulatory experts turn complex requirements into practical, compliant solutions.
Get in touch at info@thistleinitiatives.co.uk or call 020 7436 0630 to speak with our team.
Meet the Expert
Drew Blinch, Senior Consultant
Drew supports a wide variety of clients with their regulatory obligations, including FCA authorisations, compliance framework reviews and acquisition due diligence.
He brings a complaint resolution background to the business, having previously worked at the Financial Ombudsman Service reviewing and resolving medical and travel insurance complaints.