Steven Cameron, Pensions Director at Aegon, has shared his thoughts on on the closure of the FCA consultation paper on Targeted Support.
As the FCA’s Targeted Support consultation closes (29 August 2025), we may be one step closer to reducing the highly persistent ‘advice gap’. But the success of Targeted Support mustn’t be judged by how widely it’s used – but on whether it’s truly complimenting, not cannibalising, the advice market. While Targeted Support could help many non-advised customers with key financial decisions, it will never replace the personalised recommendations of holistic advice. This is why alongside Targeted Support, every effort should be made to protect all sectors of the current advice market and grow the advised population further.
The consultation’s final question asks whether targeted support is likely ‘to be complimentary to holistic advice’ or a substitute – ‘cannibalising the advice market’. This is absolutely key. The true measure of success will be how many more individuals get the right support, at the right time, whatever form that may take.
Significant details outstanding
There are some remaining issues and barriers to successfully delivering Targeted Support. Under the Privacy and Electronic Communications Regulations (PECR), Targeted Support will likely be a financial promotion, meaning we need relaxations or exemptions to maximise its reach. The Financial Ombudsman Service (FOS) also needs to give the industry confidence that Targeted Support won’t be assessed against the same standards as full advice.
The FCA could also offer firms more clarity on its expectations by setting out good and poor practice examples. These could cover areas such as how granular customer segments should be, different approaches to verifying customers fit in a particular segment, and when additional information offered by a customer may affect the process.
Which customer groups will be first to receive targeted support?
Subject to resolving outstanding details, Targeted Support could potentially help millions of non-advised workplace pension auto-enrolees. Built around groups with common characteristics, it could provide a better understanding of adequate pension contributions for ‘people like you’. It could also help with selecting from retirement options or avoiding unsustainable income drawdown withdrawals.
It’s disappointing that the FCA has currently ruled out using Targeted Support for pension consolidation. Most individuals approach retirement with multiple pots and Targeted Support could be very helpful here where advice isn’t sought. The FCA paper also envisages firms using Targeted Support to suggest customers retaining large cash balances over £10,000 invest the excess. The Government sees this as a potential boost for UK economic growth. But future cash-savings interest rates, as well as stock market sentiment, may impact firms’ attitudes here – without careful positioning, falls in values shortly after investing a lump sum could lead to widespread consumer dissatisfaction.
