Grania Baird, Partner at Farrer & Co, explains how the FCA’s new targeted support regime, launching in April 2026, will reshape the UK retail investment landscape. She outlines how the reforms aim to close the advice gap by allowing firms to offer tailored guidance to consumer groups, while highlighting the new permissions, Consumer Duty requirements and practical challenges firms will face as the regime goes live.
The FCA’s new targeted support regime, launching in April 2026, marks a radical shift in the UK retail investment landscape. The regime represents a deliberate move away from the binary choice between personal recommendations versus guidance that has constrained firms to date.
The FCA’s research has found that there are a large number of UK consumers who would like some help with their pensions and investments, but who do not want to or cannot afford to pay for regulated advice.
Targeted support aims to fill the ‘advice gap’ by allowing firms to provide tailored suggestions for groups of consumers with common characteristics, without this amounting to a personal recommendation. However firms will need to have a new permission to provide targeted support, the Consumer Duty will apply in full and firms will need to design and adopt a customer segmentation approach.
The new regime goes live in April, and from March firms will be able to start applying to the FCA for the new permission of delivering targeted support.
What will firms be able to offer under the new regime?
Firms will be able to provide suggestions designed for groups of consumers defined by reference to a situation involving a shared financial support need or objective and where relevant, common characteristics (‘consumer segments’), to help them make decisions about their investments or pensions.
The consumer segments will need to be sufficiently granular to be meaningful, but not so detailed as to be similar to the analysis that a firm providing regulated investment advice would need to undertake.
Firms will need to have reasonable grounds to consider that targeted support will put consumers in a better position than if that support were not provided. Following feedback during the consultation the FCA decided to use the phrase “better position” which would also prevent confusion with the Consumer Duty “good outcomes” rule.
Firms will be able to charge for the new service, but the FCA expects many firms will offer this free of charge, and fund it through the sale of other products.
What does offering targeted support involve?
The rules are set out in legislation and FCA rules. The new regime involves:
- The identification of consumer segments with shared financial support needs or objectives and/or common characteristics;
- The delivery of suitable ready-made suggestions to these consumers; and
- The information that needs to be provided to consumers about targeted support, including its limitations.
Firms will need to comply with existing product governance rules and to review and monitor the outcomes of their provision of targeted support. Suggestions will need to be labelled as ‘targeted support’, but firms will not need to disclose to consumers the commercial basis on which the service is provided.
What other information has the FCA provided to firms interested in providing targeted support?
With the aim of providing further regulatory clarity to firms considering offering targeted support, the FCA also published two further statements:
- Jointly with the ICO, a statement setting out the regulators’ views on how firms can provide targeted support, whilst still complying with their obligations under data protection and direct marketing rules.
- Jointly with the FOS, a statement providing information on how the FOS intends to deal with future consumer complaints regarding targeted support.
What are the challenges for firms?
The new rules present opportunities for firms – but they will still need to be careful not to stray into the provision of regulated advice.
Firms will also need to ensure that they comply with the Consumer Duty – they will need to be able to evidence that their provision of targeted support is consistent with relevant outcomes, including price and value (even if the product is provided at no cost).
There is a risk of firms becoming overly cautious, thereby missing the potential of the new regime. The most successful firms will be those that find the right balance and offer a meaningful service which is attractive to consumers.
What are the next steps?
Firms should be considering whether they want to provide targeted support and if so, they can access the FCA’s pre-application support service which has already opened. If they are not already authorised, they will need to start preparing for the authorisation process, which can take some time. It is expected that most firms wishing to provide targeted support will already hold other permissions, and if so will need to start preparing their application for a variation of permission for the new regulated activity.
The authorisations gateway will open in March 2026, with the aim of the rules coming into force and the final regime going live from 6 April 2026.
The FCA is likely to provide more information to firms in advance of the regime going live, including case studies.
By Grania Baird, Partner, Farrer & Co
