The Advice Guidance Boundary Review: the new targeted support regime

In June 2025, the FCA published Consultation Paper CP25/17, setting out its draft rules for a new regulatory proposition for targeted support, in pensions and retail investments, as part of the wider joint Treasury and FCA Advice Guidance Boundary Review (AGBR). Targeted support is a new way of helping consumers that the FCA considers can narrow the gap between information and existing forms of investment advice. It should enable firms to provide suggestions designed for groups of consumers with common characteristics to help them make important decisions.

There will be a new regulated activity of providing targeted support, and in July 2025 the Treasury published a Policy Note and draft legislation, amending the Regulated Activities Order (RAO) to provide for this.

The FCA will allow firms to charge for targeted support, but anticipates that in practice many firms will offer it for free and will fund it in other ways, including through cross-subsidisation.

The proposed framework for targeted support as set out in CP25/17 is largely along the lines of the proposals published by the FCA in December 2024, with a small number of changes. The current consultation closes on 29 August, and the FCA is planning to publish final rules by the end of 2025, with a view to the authorisation gateway opening in March 2026.

The FCA has said it plans to consult further on the subjects of simplified advice and clarifying the advice guidance boundary during 2026.

Background

The Treasury and FCA launched the AGBR in 2022, as part of the Edinburgh Reforms. The intention was to review the boundary between regulated financial advice and unregulated generic financial guidance and address the "advice gap". We provided an overview of the Review in our briefing here.

In December 2023 the FCA published a Discussion Paper DP23/5, setting out three proposals, following its initial work, which were:

• Further clarifying the boundary – exploring whether further guidance or simplifying existing guidance as to what constitutes personal recommendations, so that firms would have greater certainty to provide consumers with support which did not constitute a personal recommendation.
• Targeted support – a new regulatory framework that would enable firms to use limited information to suggest products or courses of action that would be appropriate to a person in similar circumstances (a target market) and could result in firms suggesting options to the consumer on the basis of “people like you”.
• Simplified advice – a new advice regime, enabling firms to deliver a simplified form of advice, taking into account only relevant information about a specific consumer need.

In December, the FCA published a first consultation, focusing initially on pensions, which provided more detail on the proposals for targeted support, but did not contain draft rules at that stage. We now have the draft rules and detail for the new targeted support framework. 

What is the purpose of targeted support?

As proposed by the FCA, the purpose of targeted support will be to achieve “better outcomes” for consumers than if it had not been provided. The phrase “better outcomes” is different to the Consumer Duty’s “good outcomes” and the FCA notes that this is the intention, given the aim behind it, but also to avoid the impression that firms have to provide targeted support to meet the requirements of the Consumer Duty.

However, the FCA is consulting on whether the phrase “better position” is preferable given the potential for confusion. The FCA has included draft Handbook guidance to ensure that firms understand the better outcomes aim of targeted support and notes that the requirements of the regime should be interpreted in light of this guidance.  

What is targeted support?

Targeted support involves the delivery of ready-made suggestions by firms to clients in common situations, involving a common financial support need or objective, by reference to the client’s alignment with a pre-defined consumer segment.

The proposed new regime for targeted support is principally contained in a new chapter COBS 9B, which contains extensive rules and guidance which firms will need to review in detail if they plan to offer targeted support.

The new regulatory framework will be underpinned by the Consumer Duty and is intended to be outcomes focused. Firms will be required to act in good faith to help customers meet their financial objectives or avoid foreseeable harm.

Firms must treat all clients to whom they provide targeted support as retail clients even if they would otherwise be categorised as professional clients.

Firms will need to undertake an exercise to group consumers, called by the FCA a “consumer segment”, and to pre-define situations for such consumers.

Firms designing targeted support will be the manufacturer of that service, and when providing it, the distributor and must comply with the FCA rules that apply to manufacturers and distributors accordingly.   

Before offering targeted support, firms will need to have reasonable grounds to consider that customers would receive better outcomes than if they remained in their current position. Firms may decide to pre-define consumer segments or appropriate situations sequentially, or as part of a single process.

Ready-made suggestions can include suggestions to take action in relation to an existing product or service, or a new product, or not to take action.

Firms will need to establish both the including and excluding common characteristics with which to align consumers to a consumer segment. Consumer segments should be sufficiently granular, but not to such an extent that consumers may misunderstand that they have been offered individual advice. Firms will be able to make reasonable assumptions about a group, and will need to consider carefully further information they might hold or receive about a consumer during the process that may make the suggestion unsuitable.

The FCA reminds firms that they will need to consider the needs of customers with characteristics of vulnerability when they are designing and providing targeted support, including taking into account existing guidance.

FCA examples of targeted support

The FCA has provided a number of helpful examples where they consider that targeted support can be used:

Communications to customers

In line with its outcomes-based approach to regulation, the FCA is not proposing to prescribe wording for firms to use in their customer communications.

Under the draft Handbook rules, firms will be required to disclose the nature and limitations of the targeted support service, including that it is not a type of investment advice that involves more comprehensive, individualised advice. Firms will also need to make disclosures when they provide ready-made suggestions about the common characteristics of the consumer segment which the ready-made suggestion is designed for and any limitations on the scope of products considered by the firm in developing its ready-made suggestions, including if applicable that it only considered products from the firm or its group. 

Under the RAO, firms will need to include certain information, including:

• That the recommendation is not based on a comprehensive consideration of the customer’s characteristics and circumstances.
• That the recommendation is not specific to the customer.
• The common characteristics of the consumer segment to which the customer has been allocated.

Concerns have been raised by industry that targeted support communications may contravene direct marketing rules. The FCA has referred to its previous statement which it published jointly with the ICO and Pensions Regulator relating to the interplay between customer support and direct marketing. The FCA remains concerned that the rules as they currently stand may hinder firms from providing targeted support, and so will continue to work with the ICO and Government to consider this issue further.

What products are not in scope?

The targeted support framework will apply to investments and pensions but not to products such as mortgages and pure protection insurance. It cannot be used to provide recommendations on giving up safeguarded pension benefits. As currently proposed firms will also not be able to use targeted support to suggest a specific annuity, pension consolidation into or out of a particular product, or higher risk investments subject to marketing or distribution restrictions under FCA rules (eg NMMIs and RMMIs).   

Regulatory gateway

Firms will need to apply for a Part 4A permission to provide targeted support, and this is the case whether or not they hold an existing permission to provide advice on investments. The FCA has said it will open the authorisations gateway before the new rules come into effect to ensure that targeted support services can be provided as soon as possible.     

Will appointed representatives (ARs) be able to provide targeted support?

In CP25/17 the FCA notes that it is for HM Treasury to decide whether ARs should be able to provide targeted support, but the FCA sees risks with ARs delivering this service and as a result is consulting on the basis that they would be excluded from the new regime. This seems quite a restrictive approach in our view, and given that many of the large principal firms have the capabilities that the FCA considers are necessary to provide targeted support we query if this is the right approach and risks reducing the take up of targeted support. 

Do any qualification requirements apply?

As proposed no qualification requirements apply for employees involved in providing targeted support.  

Next steps

The FCA’s consultation closes at the end of August. Once the final rules are published, the FCA will also make available application forms for variations of permission and new firm applications, with a view to opening the Authorisations gateway next March.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, July 2025