Whilst targeted support is expected to be a "major" step forward, refinements are needed to help ensure that the regime succeeds, with particular concerns raised around the proposed mandatory signposting requirements. 

The Financial Conduct Authority (FCA) recently launched its latest consultation on targeted support, seeking views on changes to its handbook rules designed to ensure that the proposals work effectively alongside existing requirements.

However, The Investing and Saving Alliance (TISA) urged the FCA to reconsider its proposed changes to the targeted support regime, warning that these risk causing confusion, eroding consumer confidence, and creating unnecessary operational challenges for firms.

While strongly supporting the regime in general, TISA raised concerns about the FCA’s proposed mandatory signposting requirements for pension communications and its approach to remuneration disclosures.

In particular, TISA warned that the mandatory signposting rules could result in firms being required to direct customers to targeted support services before those services are fully operational or available.

This risks creating confusion and frustration for consumers, while placing unnecessary compliance burdens on firms, including firms that have no intention of providing targeted support.

Given this, it argued that providers should be given the flexibility to communicate in a way that reflects their actual service models and rollout timelines.

This builds on previous industry concerns in this area, with Aegon pensions director, Steven Cameron, warning that "it could confuse and frustrate customers if the FCA requires signposting ahead of when targeted support has ‘bedded in’ and become more generally available".

This is not the only area of concern, however, as TISA said that FCA’s approach to remuneration disclosures may inadvertently undermine consumer confidence and trust, warning that explaining complex internal cost structures and cross-subsidisation models could risk overwhelming consumers with information that is unlikely to be meaningful or helpful.

It also cautioned that the proposals could be barrier to targeted support being made available to members of trust-based pension schemes.

TISA head of policy, Sophie Legrand-Green, said: "Targeted support has the potential to transform how consumers engage with financial services, but it must be built on a disclosure framework that is intelligible, supports consumer confidence and aligns with how firms operate. 

"The FCA should leverage the Consumer Duty and recognise firms’ ability to judge what information is most useful to their customers, how best to communicate it, and when their services will be ready.

"A flexible, principles-based approach – rather than rigid disclosure mandates – will better support innovation, operational readiness and consumer confidence.

"We welcome the FCA’s commitment to progressing this regime and stand ready to work with the regulator and industry to ensure its success."

This was echoed by Association of British Insurers long-term savings policy manager, George Ritchie,  who said that while targeted support will be a "major step forward" in helping people make confident decisions about their pensions and investments, for targeted support to succeed, the rules must work seamlessly with existing and incoming services. 

"Without intervention, current proposals could lead to clunky customer journeys as investment pathways will have to be offered even where a firm is already taking a customer through a targeted support journey covering drawdown investment decisions," he stated. 

"We are asking for the FCA to waive the requirement to offer investment pathways in this scenario, as well as to prioritise data export as a feature of MoneyHelper Dashboard so users can simply share their dashboards data with firms to receive better informed help." 

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