The Financial Conduct Authority’s (FCA) new targeted support regime is one of the most important regulatory developments for financial services in the UK in years. This framework creates a regulated category of support between generic guidance and full regulated financial advice. It aims to make quality financial support more accessible and affordable for a wide range of consumers while continuing to protect customers.
Under the new rules, firms offering targeted support must meet specific compliance obligations covering customer assessment, segmentation, suggestion frameworks, outcome monitoring, staff competence, governance, documentation and complaints handling. To be ready for the launch of the regime in April 2026, advisers and compliance teams need to understand these requirements in detail.
What Targeted Support Is and Why It Matters
Targeted support is a regulated service being introduced as part of the FCA’s Advice Guidance Boundary Review, created to help address the longstanding advice gap in the UK. Industry and government research shows that relatively few consumers receive regulated financial advice, especially on pensions and investments, due in part to cost and complexity.
Under the targeted support framework, FCA-authorised firms can provide group-based suggestions aimed at segments of customers with similar characteristics, without undertaking full individual suitability assessments required for regulated advice. Unlike regulated advice, the emphasis is on appropriate suggestions for segments rather than bespoke recommendations.
The regime is designed to improve consumer access to timely, relevant financial decisions, such as choosing pension access options, planning contributions, or managing investments, for consumers who are unlikely to seek or afford full advice.
Core Compliance Principles
Under the FCA’s approach, targeted support must be delivered in a way that aligns with broader conduct standards already applied across regulated activities. These principles include Consumer Duty outcomes, fairness, clear communications, and proper governance.
The FCA expects firms to ensure that targeted support helps customers into a materially better position than before receiving it. Consumer Duty obligations apply, meaning firms must demonstrate that outcomes are appropriate and fair across segments of users. This includes showing customers understand limitations of the service and when they should seek regulated advice.
Collecting Appropriate Customer Information
Firms must collect enough information about customers to assign them to the correct segment and to generate appropriate suggestions. This requirement does not mean replicating the depth of data collected for full regulated advice.
Essential data includes:
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Basic personal characteristics such as age, employment status, or life stage
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Relevant financial circumstances including income, savings and existing investments
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Objectives and financial needs such as retirement planning or cash allocation decisions
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Simple indicators of risk tolerance and time horizon
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Vulnerability markers to help identify customers needing extra support
The assessment must be thorough enough to ensure that the consumer is suitably placed into a segment and is not, in reality, someone whose circumstances require regulated advice.
Firms should document both the data collected and how that data was used to determine segmentation. Robust documentation supports audit trails and regulatory reviews.
Designing Defensible Segmentation
A core requirement of targeted support compliance is building a defensible segmentation methodology. Simply grouping customers on convenient or superficial criteria will not meet regulatory expectations.
Segmentation should be based on characteristics that meaningfully relate to financial needs and appropriate suggestions. Evidence of segmentation effectiveness should come from real data where outcomes for people in each segment align with the intended support. Firms should regularly review and validate segmentation to make sure it continues to deliver appropriate outcomes.
Suggestion Frameworks: What Compliance Expects
Targeted support operates through suggestion frameworks which set out common recommendations for each segment.
Compliance criteria include:
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Needs analysis for each segment
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Product appropriateness relative to segment characteristics
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Consideration of alternatives with documented rationale
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Clear explanations of suggestion limitations and risks
Products or suggestions must be defensible and based on evidence showing the recommendation meets the common needs of that segment rather than reflecting product availability or firm preferences. Regulators will expect documentation showing how alternatives were considered and why specific suggestions were chosen.
Firms must also disclose key information clearly and fairly, including charges, product features, risks, and the fundamental distinction between targeted support and full advice.
Outcome Monitoring and Oversight
A critical compliance requirement is outcome monitoring. Targeted support is not static. Firms must track whether support outcomes align with intended segment needs and make adjustments if patterns of poor outcomes emerge.
Monitoring should include:
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Customer satisfaction data
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Complaint rates around suggestions
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Uptake rates of suggested actions
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Any evidence of negative outcomes that suggest a segment is not being well served
Firms need systems to flag problems and corrective action procedures. For example, if one segment shows consistent dissatisfaction or a spike in complaints, the suggestion framework or segmentation criteria should be reviewed and revised promptly.
Clear Boundaries and Escalation
Targeted support is not designed for complex or bespoke financial decisions. Firms need clear boundaries that define what targeted support covers and when a customer must be escalated to full regulated advice.
Common escalation triggers include:
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Complex financial situations such as significant investment portfolios
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Multiple interacting financial needs such as estate planning or tax optimisation
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Vulnerable customer indicators that require more personalised care
Escalation policies and procedures should be documented, trained and consistently applied.
Staff Competence and Supervision
Firms offering targeted support must ensure staff have appropriate competence to deliver it effectively and in line with regulatory expectations. This includes training in:
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The regulatory framework and how targeted support differs from regulated advice
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Segmentation application and evidence review
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Suggestion framework use and rationale explanation
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Escalation triggers recognition
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Vulnerability handling
Competence should be assessed through scenario-based testing, not just paper exercises, and supervision mechanisms should be in place to catch mistakes and reinforce good practice.
Technology and Documentation Requirements
Technology supporting targeted support must be reliable and compliant. Firms need to ensure that systems consistently apply segmentation rules and generate suggestion outputs that can be audited.
Key technology expectations include:
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Testing and validation before deployment
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Complete audit trails for data usage and decision paths
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Change control procedures for systematic updates
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Business continuity planning for technology failures
Documentation must capture all stages of targeted support delivery, from data collection through to the suggestions provided and any outcomes monitoring conducted.
Consumer Duty and Communication Obligations
Consumer Duty applies fully to targeted support. Firms must demonstrate not only that their processes comply with rules, but that the outcomes for customers are fair and beneficial.
This means showing customers:
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What targeted support is and is not
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When they should seek full advice
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Why suggestions are appropriate for their segment
Clear, balanced communication reduces misunderstandings and complaints. Marketing about targeted support must be fair, not overstating scope or benefits, and must make the distinction with regulated advice explicit.
Regulatory Reporting and Engagement
Firms should expect reporting requirements related to their targeted support activities. Regulators are likely to want visibility into:
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Customer volumes and trends
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Segmentation approaches and changes
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Outcomes data and complaint patterns
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Major compliance issues or remediation actions
Early engagement with FCA supervisors about targeted support plans can clarify expectations before full implementation.
Professional Indemnity and Risk Management
Professional indemnity insurance needs to explicitly cover targeted support. Firms must confirm that policies include this category and reflect the potential exposure associated with volumes and complaint risk.
Insurance coverage should also extend to technology vendors where appropriate, especially those providing segmentation or suggestion generation tools.
Transition Planning for Firms
Firms already providing services similar to targeted support should plan how to transition into the new regime. This includes:
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Reviewing existing segmentation and suggestion processes
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Updating documentation, templates and communications
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Training staff on formal requirements
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Engaging regulators early to confirm classification
Existing customers receiving similar services may need communications about the regulatory reclassification of the services they receive.
Frequently Asked Questions about FCA Targeted Support
When will the targeted support rules take effect?
The FCA expects targeted support rules to take effect from April 2026, subject to secondary legislation and the opening of the application gateway around March 2026. Financial Reporter
Do firms need special permission to offer targeted support?
Yes. Firms must apply for and receive FCA authorisation to provide targeted support under the new regime. (FCA).
Will regulated advice still be required for complex cases?
Yes. Complex client situations, large portfolios and advanced planning needs remain within the scope of full regulated financial advice.
