The Targeted Support framework: all steam ahead despite areas of uncertainty

At a glance

• The FCA has published final rules on its Targeted Support (TS) framework. These follow Consultation Papers 25/17 and 25/26. The new regime is intended to offer firms a “once in a generation” opportunity to rethink engagement and support for investment and pensions customers.
• Under this new regime, firms will be able to design product suggestions that are suitable for customer segments sharing common characteristics. Unlike existing regulated advice which must be charged for, TS can be offered for free. The TS framework is mostly principles-based. Firms will be expected to ensure that their TS suggestions put customers in a “better position” than if they had not received TS. The original proposals were for firms to deliver “better outcomes” under TS; this has now been changed to “better position” to avoid confusion with Duty outcomes.
• The final rules should provide firms with a lot more clarity to develop their proposition and framework. However, it is clear that firms will need to apply significant judgement across various areas of the regime to inform their approach to segment design, use of assumptions, and outcome monitoring.
• The final rules provide the starting point from which the regime will continue to develop. As highlighted in the TS readiness survey we conducted with the ABI, firms believe implementation will be a significant operational challenge and adoption will be gradual and iterative. In the meantime, the FCA plans to continue to engage with industry, provide more clarification through case studies and perhaps more guidance. This means that firms will have to build their TS frameworks in a way that allows them to adapt to any clarifications and changes that emerge. The full range of support will eventually include changes to simplified advice and Guided Retirement for the pensions sectors. Firms will need to keep these other variables in mind to ensure the work they do on TS will fit into the wider support spectrum.
• Workplace pensions providers will be able to offer TS proactively to customers under the soft-opt in regime,¹ following legislative changes from the government.
• The authorisations gateway will open from March 2026, and the regime will come into force on 6 April 2026, when legislation will take effect. There are only three months until the gateway opens. Key information the FCA will require for authorisation includes explanation and justification of consumer segmentation methods, TS journeys, TS governance and control frameworks, and customer testing evidence supporting the firm’s approach. Firms should pay particular attention to how TS will be embedded in their overall conduct risk frameworks and how TS outcomes will be monitored and issues actioned promptly. We expect the regime to be under heavy FCA scrutiny over the next two years, with the FCA planning data requests and a full review.
• Over time, the new regime is likely to have a material impact on market dynamics and is likely to result in winners and losers. For example, building societies reliant on cash deposits must consider the TS threat and weigh up the benefits of partnering with third parties. For insurers offering DC pensions, the descoping of consolidation and banning the offering or quoting of specific annuity products under TS should be factored into any detailed TS plans.

1. Understanding the FCA’s new “consumer support continuum” structure

Despite growing demand for financial help, a large proportion of UK consumers remain underserved when it comes to financial support. Regulatory constraints have made it challenging for firms to provide personalised support without crossing the regulated advice boundary. The fact that firms must charge for regulated advice has in turn deterred many consumers from taking it.

To address this issue, the FCA is reviewing its consumer support continuum. It introduces two complementary ways to narrow the gap between advice and guidance:

• Targeted Support: allows firms to provide ready-made suggestions to clients that have common (including and excluding) characteristics. The suggestions should be suitable at the consumer segment level, and firms must ensure customers receiving TS are in a “better position” than if they had not received TS -the original proposals stated firms should deliver “better outcomes” under TS which was concerning for firms. The change to “better position” is supported by industry as a more proportionate requirement.
• Simplified Advice: the FCA will consult to simplify its existing advice rules to make clearer how firms can provide more focused and simplified forms of advice. This would allow firms to offer personal recommendations for straightforward, clearly defined customer needs using more streamlined, standardised processes. However, these changes are not expected to be finalised before the end of 2026 at the earliest.

Firms preparing to implement TS from April 2026 will need to do so without full certainty about what form the simplification of advice rules will take. This adds uncertainty in terms of building a framework across the customer support continuum, and might result in slower adoption.

Figure 1 outlines key differences between services in the consumer support continuum.

Figure 1: Comparing types of support

2. Authorisation pathway and timeline

Only FCA-authorised firms with over £500,000 in capital will be permitted to offer TS. To deliver TS, firms must apply for a new Variation of Permission (VoP) from March 2026. The VoP application will require firms to set out a fairly granular view of their TS framework, including: explanation and justification of consumer segmentation methods, TS journeys, TS governance and control frameworks, and customer testing evidence supporting the firm’s approach. We are of the view that firms should also carefully consider how their TS services will be embedded into their conduct risk frameworks, how data on TS effectiveness and outcomes will be gathered and analysed as we expect the FCA to request detailed data² and use it to shape the ongoing development of the framework. In the PS, the FCA highlights that numerous firms have already submitted their draft application to the FCA’s Pre-Application Support Service (PASS) to receive early feedback on their applications. There are only three months left until the authorisation gateway opens. If firms want a first mover advantage in providing TS, they will need to move very quickly to complete their proposition development and make the necessary applications.

Figure 2: Timeline of regulatory developments and TS authorisation

3. The TS framework: key features

TS will include an internal design phase where firms need to determine pre-defined situations, define consumer segments and develop ready-made suggestions (hereafter “suggestions”); and a delivery phase when suggestions are matched and verified before being delivered to customers. 

Figure 3: TS framework structure 

A. TS Scope

Regarding scope, TS will apply to DC pensions and retail investments; all other financial products will remain out of scope. In addition, within the scope of investment products, the TS regime excludes high-risk products and products outside of the FCA marketing rules. For pensions, suggestions to consolidate pots and suggestions of specific annuity products are outside the scope of TS (see the process for annuities in Figure 4).

Figure 4: TS product scope 

B. Segments and assumptions

• TS should be provided to groups of customers who share similar characteristics - such as age, account types, or types of transaction. Segments must include “including” and “excluding” characteristics. The FCA flagged that segments should not be too granular so as to lead the customer into believing they are receiving full advice. Finding the right level of segment granularity will be challenging and firms had requested further clarification from the FCA in this area.
• However, in the final rules the FCA confirmed its position by requiring that firms must not design segments with a level of detail that would be associated with the level of detail that a firm providing fully regulated investment advice would apply (ie: comprehensive consideration of a customer’s individual circumstances and characteristics). This requirement is unlikely to help provide much clarity to firms as to how granular “too granular” is, since the level of granularity could well vary from product to product and segment to segment.
• The FCA seems aware that the segment granularity issue will require further work and plans to publish case studies and possibly guidance on this issue by 6 April.
• Firms will be able to rely on “reasonable assumptions” to limit the number of characteristics used to define one segment. However, the FCA has now introduced a requirement that firms must not make assumptions that are material to the suitability of the suggestion. This means that firms will only be able to use assumptions if they have an immaterial impact on the suggestion's suitability. A quarter of respondents to our TS survey intended to rely on reasonable assumptions in their TS propositions. Firms will need to review their approach to assumptions in light of the new requirement.

C. TS disclosures approach

The FCA has removed its previous proposals to introduce mandatory customer disclosure touchpoints in the TS journey but still expects firms to be very transparent when delivering TS. To aid such transparency, firms will be required to disclose any differentials in the price of a product or service offered through TS compared with a non-TS journey. Firms are also encouraged by the FCA to keep a record of how they meet their TS disclosure obligations.

Firms will have to test customer understanding of TS and clearly disclose that TS is different from fully regulated advice and not an individualised service. Firms will also have to disclose the common characteristics of the TS segment customers belong to, and any limitations in the data used to provide TS suggestions. The Sprint³ and FCA research⁴ showed that customers tend to have “disproportionate expectations” about the granularity of data used to form TS suggestions they receive. Clearly signposting the limits of TS suggestions will be crucial to mitigate risks of product mis-selling.From a branding perspective, firms will be required to call the service “Targeted Support” at the point of delivery of the suggestion. However, they will be free to use a different name or term in the customer journey. 

D. TS charging model

Firms will have discretion on how to charge for TS — from embedding costs in account fees, offering TS free of charge, or establishing standalone charging models. This marks a material difference to regulated advice and could undoubtedly help in making the regime more accessible to consumers.

In designing their commercial TS models firms should consider:

• How their charging model delivers fair value to customers with a focus on differential customer outcomes and the impact of cross-subsidisation on vulnerable customers.
• How to manage conflicts of interest to avoid misaligned incentives that could result in irrelevant nudges, overselling or partnerships with parties that might not be offering good value to customers.
• DC Pensions providers should also consider how cross-subsidisation of TS may affect their offerings under the upcoming FCA Value for Money regime to be consulted on next year.

E. Outcomes monitoring

The TS framework leverages PROD and the Duty in relation to outcomes monitoring requirements. Firms will be expected to monitor outcomes for both the TS service and the product being offered under the TS suggestions. If a product is adapted to be offered under TS, firms will need to consider the impact of any significant adaptation under PROD to ensure it provides fair value to consumers.

Many firms had been concerned about the potential need for ongoing monitoring of TS. The FCA has clarified that firms are required to assess the suitability of a suggestion at the point of specifying the suggestion to the relevant segment and not on an ongoing basis (due to the one-off nature of TS). As part of monitoring the outcomes from the TS service, firms must consider if the suggestion remains suitable for the segment over time.

4. Complaints and marketing: working towards clarity

Over the past few months, the FCA and Financial Ombudsman Service (FOS) have been in discussions to help clarify how they will monitor TS and deal with complaints related to the service. The FCA and FOS, in a joint statement, have committed to work closely together to seek alignment on the interpretation of TS rules. Crucially, if the FOS identifies an issue with wider implications, it will seek a view of the FCA. This commitment is designed to complement any changes that may be implemented as part of the Government’s broader FOS reforms. It remains to be seen how effective these commitments prove to be in practice in the coming months.

Another area of contention was whether firms could proactively provide TS suggestions to customers without breaching “direct marketing” rules. In practice, opt-in consent rules under Privacy and Electronic Communications Regulations (PECR) could restrict TS reach. The ICO and FCA issued a joint statement alongside the final rules to explain how firms can actively promote their TS offering outside the scope of “direct marketing” rules (e.g., advertise the launch on the website or socials) under the current regime. 

However, the Government also confirmed that workplace pensions providers will be able to offer TS proactively to customers under the “soft opt-in” regime following changes in secondary legislation, in a move that will be very welcome to the pensions sector.

5. TS within the wider spectrum of customer support and market dynamics

The FCA expects TS to be one building block integrated into firms’ overall customer support continuum instead of a large-scale alternative to advice. Therefore, the development of TS should not be considered in isolation from other key components of a firm’s product distribution and customer support strategy.

TS will be a new model of engaging and supporting customers and we expect it to change market dynamics. The impact will vary by sector and depend on firms’ differing business models.

6. The wider landscape: TS as one piece of a bigger puzzle

There are many regulatory initiatives moving at pace under the Government’s and regulators’ growth objectives. In December 2025, the FCA published several interconnected documents relating to TS and the pensions market. We include links and a brief summary of each in the Annex.

Firms should take both new and existing regulatory initiatives into account when deciding their TS strategy and approach as they are likely to have a material effect on TS implementation over the coming months and years. 

Figure 6 illustrates some of the interconnected initiatives and how they are all anchored by the Consumer Duty.

Figure 6: TS and the wider regulatory landscape

Conclusion

In conclusion, there are only three months until the expected TS go-live day. The final rules should provide firms with a lot more clarity to progress their proposition and framework development. However, it is clear firms will need to apply significant judgement across various areas of the regime to inform their approach to segment design, use of assumptions, and outcomes monitoring. In the meantime, the FCA plans to continue to engage with industry, provide more clarification through case studies and perhaps more guidance. This means, that firms will have to build their frameworks in a way that allows them to adapt to any clarifications and changes that might emerge. The full range of support which will eventually include changes to simplified advice and guided retirement for the pensions sectors are other variables that firms will need to keep in mind to ensure the work done on TS will fit into the wider support spectrum.

Annex

In December 2025, the FCA published several interconnected documents relating to TS and the pensions market. We include links and a brief summary of each below.

References

1. Under Regulation 22(2) of the Privacy and Electronic Communications Regulations, firms are generally prohibited from issuing unsolicited "direct marketing" communications via email without the consent of the recipient. There is a limited exception for firms' customers known as the "soft opt-in" where marketing can be undertaken on an opt-out basis if certain conditions are met. Following engagement with regulators and consideration of stakeholder feedback, the Government has committed to take forward secondary legislation to enable workplace pension providers to deliver targeted support communications to members who have not opted-out of direct marketing.

2. FCA Policy Statement 25/22 paragraph 8.9 – Table 1: Data related to the provisionsand outcomes of TS services

3. FCA, FCA concludes consumer investment policy sprint, 2025.   

4. FCA, Advice Guidance Boundary Review Targeted Support for Non-Advised Defined Contribution Pensions, 2025