The Financial Ombudsman Service (FOS) and the Financial Conduct Authority (FCA) have issued a joint statement confirming how complaints will be treated under the new targeted support regime.

Shared alongside the near-final rules for targeted support, the statement acknowledged that "targeted support is different from other forms of investment advice".

In particular, the statement confirmed that targeted support is a "one-off service" and is not subject to the ongoing suitability requirements in Chapters 9 and 9A of the FCA’s Conduct of Business Sourcebook.

"Firms are required to assess suitability at the point of specifying the ready-made suggestion for the relevant consumer segment and not on an ongoing basis," the statement read.

"Therefore, suitability is a point-in-time assessment and is not judged with the benefit of hindsight."

It also confirmed that suitability is not assessed at the individual consumer level, as it is expected that a consumer will receive a suitable suggestion if they align with a properly designed consumer segment.

However, the statement clarified that firms must not provide a suggestion if they are aware of information indicating it would be unsuitable for a specific individual.

Broadstone senior actuarial consultant Phil Smith, welcomed the clarity, suggesting that while firms will naturally be cautious about how complaints will be handled, the proactive statement from the FCA and FOS aims to give firms greater confidence.

"The statement underscores that suitability assessments for targeted support will be based on the design of consumer segments rather than at an individual level and will not be judged using the benefit of hindsight, helping firms innovate without fear of a disproportionate redress risk," he said.

The statement also suggested that, in many cases, firms will be able to resolve complaints internally, although where this is not possible, the complaint can be escalated to the FOS.

The ombudsman will determine most cases without recourse to the FCA, although it confirmed that complex cases may arise where the interpretation of FCA rules carries "wider implications".

A wider implication case could be one which affects a large number of consumers where there is a significant amount of redress at stake or where there is a risk of business failure

While there is no legal mechanism to force a referral, firms or consumers may suggest that the ombudsman refers such issues to the FCA, provided they submit supporting evidence.

The joint statement also confirmed that the FCA and FOS will be applying their Memorandum of Understanding in the context of targeted support, meaning that if there is an issue with wider implications, the FOS will consider if it is appropriate to seek a view from the FCA on the interpretation of its rules, and how redress could potentially be assessed.

This process is intended to help the FCA identify issues on which further clarification would be beneficial, which may be provided through guidance or rule changes, as well as workshops, case studies or thematic reviews.

The Financial Ombudsman will also consider issuing insights into the complaints it has received on targeted support and how it is dealing with them.

Smith suggested that "this collaborative approach demonstrates a constructive effort by regulators to balance consumer protection with innovation, enabling firms to offer meaningful support that fills gaps between general guidance and full advice".

Further industry engagement is also expected, as both the FCA and FOS acknowledged that the way firms deliver targeted support will evolve over time.

Therefore, both the FCA and the Financial Ombudsman are committed to engaging collaboratively with firms, trade bodies and consumer groups following the implementation of the regime.

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