The Financial Conduct Authority (FCA) has stressed that "full-fat advice will continue to have an important role to play" even with the introduction of targeted support, also sharing further details on how targeted support complaints will be dealt with.

The FCA yesterday (30 September) launched a consultation on additional changes to its handbook rules, designed to ensure that its targeted support proposals work effectively alongside existing requirements.

Work on targeted support was also highlighted by FCA director of consumer investments, Lucy Castledine, who stressed the need to close the advice gap during her speech at the Personal Investment Management & Financial Advice Association (PIMFA) Compliance Conference.

Castledine highlighted targeted support as a "once-in-a-generation opportunity to reshape the advice landscape and improve how people engage with their financial decisions".

"Our proposals for targeted support for those with choices to make about their pensions and investments are a key part in expanding the supply of support to the consumers who need it, and narrowing that stubborn national advice gap," she continued.

She also confirmed that, in addition to its work on targeted support, the FCA is working towards consulting on changes to its rules on simplified advice and ongoing advice services early in 2026. 

However, Castledine clarified that "we know targeted support cannot ever be a replacement for bespoke financial advice", emphasising that "full-fat advice" will continue to have an important role to play for clients who want or will benefit from more personal recommendations tailored to their specific circumstances.  

"But we want targeted support and simplified advice to be part of a continuum of support so that consumers can pick what is right for them," she added.

"Our proposals are aimed at making sure there are good-quality suggestions while enabling the scalable delivery of support by firms to the mass market of non-advised consumers.  

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

Castledine also pointed out that the pre-application support service has now opened, a month ahead of schedule, allowing firms to express a formal intention to apply to provide the service, which will allow the FCA to assess them ahead of a formal application next year.

Industry experts have raised concerns over the pace of the work, however, particularly proposals to signpost savers to targeted support as soon as possible, with some suggesting that time should be given to allow targeted support to 'bed in' and become more generally available.  

However, Castledine said in her speech that "there are some trade-offs that we will have to make, but we think that they’re the right ones to make, to balance risk, to help more effectively".  

Castledine also provided further clarification on how targeted support complaints will be managed, confirming that firms providing this service will be subject to a tailored conduct regime, which the Financial Ombudsman Service (FOS) will have regard to when assessing targeted support cases.    

She also confirmed that the FCA is "clear that targeted support isn’t optimised for the individual and doesn’t carry the expectations that firms would have to demonstrate that it is".

Instead, she explained that firms will have to show that better outcomes can be delivered at a customer segment level through targeted support.

"If firms believe that those better outcomes can be delivered through targeted support, then it can be offered," she continued.

"If an individual subsequently loses money because of a market downturn, that does not necessarily mean that targeted support should not have been provided in the first place."

Castledine also stressed the need to ensure that the redress system takes into account the fact that the way targeted support is delivered will likely evolve over time.  

"We also want to make sure we maintain oversight of how the regime works and any issues that may emerge after implementation, so that we can consider whether further clarification on our rules is required," she stated.

According to Castledine, the most recent FCA / FOS Memorandum of Understanding, will play a key role in this work, as this framework includes the scenario where the FOS would seek a view from the FCA on the interpretation of our rules and how eligible redress could potentially be assessed, to ensure our requirements are interpreted consistently.

"We will employ this approach on targeted support to make sure that we provide industry with as much certainty as possible about how the redress framework will operate," Castledine confirmed.

"We believe this will increase certainty, consistency and predictability in complaints handling, whilst also preserving the operational independence and impartiality of the FOS."

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