HMT and UK FCA announce new "targeted support" proposals for pensions and retail investments

The UK Financial Conduct Authority (FCA) has published a consultation paper CP25/17 (CP) accompanied by a press release and updated webpage, proposing a new regulatory framework for "targeted support" in pensions and retail investments. The CP forms part of the Advice Guidance Boundary Review and the FCA's five-year strategy to support growth and help consumers navigate their financial lives. The deadline for comments is 29 August and a policy statement is expected by the end of the year, subject to the volume of feedback received.

The CP proposes the introduction of a new regulated activity of targeted support, which would allow firms to provide ready-made suggestions on investment products or courses of action to groups of consumers with common characteristics, making it clear that such support does not constitute fully personalised financial advice. The UK Government has announced that it will consult on amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 accordingly to introduce the new regulated activity. A draft statutory instrument is expected to be published alongside the Mansion House speech on 15 July. The targeted support framework would not impact the existing regulatory framework for activities that can currently be delivered as guidance without FCA authorisation.

The FCA proposes to create bespoke conduct standards for targeted support as well as a dedicated authorisation gateway. Firms will still be expected to comply with relevant aspects of the existing Consumer Duty, including the need to support customers' understanding and tailor communications. The FCA also plans to consult on simplifying the advice rules in its FCA Handbook, to create a clearer distinction between simplified and more holistic advice. Simplified advice could be offered in addition to targeted support, for consumers seeking assurance about the suitability of a product for their specific needs but who do not want comprehensive advice.

You may also like to read the City of London Corporation's report, Regulating for Growth: A Cultural Shift for a Competitive UK, published this week in collaboration with industry partners and A&O Shearman. The report calls for a transformation in the UK's regulatory culture to unlock growth and enhance international competitiveness. It sets out a series of key recommendations, including that the FCA should work with industry to support retail investment, building on the proposals of the Advice Guidance Boundary Review.

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