The FCA has confirmed its final rules for the implementation of 'targeted support', which will be rolled out from as early as April 2026.
Firms will be able to apply to offer targeted support from March next year, with the new regime kicking in from April, the FCA said in a policy statement, published today.
The FCA said firms should only provide targeted support when there are reasonable grounds to believe that it will lead to better position for clients compared to not providing support.
It said: "A firm should not provide targeted support in circumstances where it does not have reasonable grounds to consider that the provision of targeted support would achieve a better position for the client than if that support were not provided.
"The purpose statement aims to steer firms towards supporting consumers and not using targeted support simply to promote products."
Firms will not have to deliver suitability at an individual level, but they will need to "assess suitability at the point of specifying the ready‐made suggestion for the relevant consumer segment".
Firms that choose to deliver targeted support will need to have an "absolute minimum level of regulatory capital of at least £500,000", it said.
The Treasury has confirmed that appointed representative (AR) firms will not be able to offer targeted support initially, but it will review this position once its reforms to the AR regime are introduced.
Customers who have complaints about targeted support will be able to go to the Financial Ombudsman Service (FOS), but the FCA said it is still working with the FOS and government to provide clarity on how complaints will be handled.
What does the industry think?
David Brooks, head of policy at consultancy Broadstone, said targeted support has the potential to help close the 'advice gap', but warned that further clarity is needed.
“Key to the success of this initiative will be execution. Firms will need absolute clarity on the advice/guidance boundary to support complex decision making and to ensure that targeted support does not create new risks or uncertainty," he said.
Ben Hampton, CEO of advice at Royal London, was positive about the final proposals, saying the UK's financial services industry is "on the brink of a transformative shift".
"Our own modelling shows that as many as 21.5 million people across the UK could benefit from targeted support, underlining the scale of the opportunity to help people make better decisions and build their financial resilience," he said.
