The FCA has today published its proposals on ‘targeted support’ which would allow firms to make financial guidance suggestions to groups of consumers with 'common characteristics'.

These could include people who may be currently drawing down on their pension unsustainably, not saving enough for retirement or who have excess cash sitting in a current account, the regulator said.

The long-indicated 'once in a generation' changes, which have inbuilt protections for consumers, also support growth by enabling increased investment and innovation, the FCA said today.

The proposals in Consultation Paper CP25/17 are part of the regulator's plans to bridge the advice gap and will enable change to the advice-guidance boundary.

In its proposals published today, the FCA said:

• “We are proposing a new form of support – targeted support – in pensions and investments, which would enable firms to provide suggestions designed for groups of consumers with common characteristics to help them make important decisions."
• “Targeted support also has the potential to act as a stepping stone to simplified or more comprehensive investment advice where consumers want or need more personalised advice."
• “We are also proposing to conduct further work on simplified advice, and clarify further how guidance can be given."
• “Our proposals taken together allow firms to provide a sustainable continuum of support to help their customers at different times of their life, as their needs and circumstances change.”

The FCA has, however, decided not to progress its plans for so-called 'simplified advice', a cut-down version of full advice. It will consult on amendments to COBS 9/9A to create a clearer distinction between simplified and more holistic advice but has decided "not to progress" the proposals for a general bespoke simplified advice regime as outlined in DP23/5.

Talking about the targeted support proposals, Sarah Pritchard, deputy chief executive of the FCA, said: “We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement.

“These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike.”

She said the reforms should set the framework for the next 20-30 years, to support consumers now as well as future generations.

The regulator gave some examples of how targeted support could help:

• 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 struggling with pension access decisions: Currently firms can provide a consumer with factual information around their decumulation options. Under targeted support, a firm could suggest how a consumer could access their pension in a way which is appropriate for their consumer group, for example taking an income in a more tax efficient way using an uncrystallised funds pension lump sum rather than drawdown.
• 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.

Chancellor of the Exchequer Rachel Reeves MP said: “Too many people are missing out on the support they need build a more secure financial future for themselves and their families. Today’s reforms will make a real difference to help working people make better long-term financial decisions, ultimately putting more money in their pockets as part of our Plan for Change.”

• The FCA has asked for comments on its proposals by 29 August. It said it aims to publish a policy statement by the end of 2025, though that depends on the extent of feedback it gets to the consultation.