FCA confirms targeted support framework under PS25/22

The FCA’s Policy Statement 25/22 (PS25/22), confirms the introduction of a targeted support framework designed to sit between generic guidance and regulated financial advice. The framework is intended to help firms provide more personalised support to retail consumers, without crossing the regulatory boundary into personal recommendations. 

Firms intending to provide targeted support will need to apply for a new regulatory permission, which (subject to legislation) they can do from March 2026.The regime is expected to take effect from April 2026. This marks a shift from conceptual discussion to practical delivery, with firms now needing to decide whether and how targeted support fits within their business and operating models.

At a time when the FCA is seeking to simplify and reduce regulatory burden, it has described targeted support as a radical, once-in-a-generation reform. The policy responds to long-standing concerns that many consumers struggle to engage with financial decisions and are either unwilling or unable to access full regulated advice. This advice gap is widely recognised as a driver of poor outcomes, particularly in pensions, investments and long-term savings.

Importantly, the FCA has been clear that targeted support represents an evolution of the regulatory perimeter rather than a relaxation of standards. Firms are expected to exercise judgement, maintain appropriate safeguards and demonstrate that support delivered under the framework leads to good consumer outcomes, in line with the Consumer Duty.

What targeted support allows firms to do

Under the framework, firms will be able to group consumers with similar characteristics, needs or circumstances and provide tailored prompts, options or courses of action, with the aim of putting them in a demonstrably ‘better position.’ This could include, for example, helping consumers understand whether they might benefit from reviewing pension contributions, increasing savings, or reassessing investment risk levels.

However, there is a fundamental distinction between targeted support and regulated advice. Targeted support must stop short of advising individual consumers what they should do in relation to a particular financial product. In practice, the risk of being perceived to have given advice is likely to be one of the most significant compliance challenges for firms.

The FCA expects firms to clearly explain the nature of the support being provided, including its limitations, and to signpost consumers to regulated advice where appropriate. Communications must be clear, fair and not misleading, and firms should be confident that consumers understand the difference between targeted support and advice. This places a premium on careful design of customer journeys, and language and disclosures – particularly in digital and automated environments. 

Scope, application and governance

The FCA expects that targeted support will be most relevant in areas where consumer disengagement and inertia are most prevalent. While pensions and investments have been highlighted as priority areas, the framework is not limited to these sectors.

PS25/22 makes it clear that the Consumer Duty applies to targeted support, including the product governance requirements. In practice, this means firms offering targeted support will need to design and test consumer segments, and scenarios and journeys. They must also be able to clearly define what constitutes the ‘better position’ into which customers are being supported, and be able to evidence whether they are achieving those outcomes. Where outcomes fall short, firms are expected to take appropriate action.

Governance is a consistent theme throughout PS25/22. Senior management is expected to oversee the design and delivery of targeted support, ensuring it aligns with the firm’s customer base, risk appetite and operational capabilities. This includes extending existing product governance, management information and oversight arrangements to cover targeted support in a proportionate but robust way.

Monitoring digital journeys

For firms offering digital or automated journeys,there are additional considerations. Targeted support is likely to rely on data, analytics and decision logic to segment customers or trigger interventions. Firms will therefore need confidence in the quality of underlying data, transparency of decision-making and the ability to explain how outcomes are generated, both internally and to regulators.

Determining whether to offer targeted support

Firms that are considering offering targeted support should begin assessing how this new services fits within their broader products, services and consumer engagement strategies. Targeted support presents both an opportunity and a regulatory challenge, but when used well, it offers a way to engage consumers more meaningfully, support better decision-making, and demonstrate good outcomes. 

Commercially and strategically, firms may identify opportunities to attract, retain or increase customer numbers and assets, and to use targeted support as a legitimate gateway to other products and services. Others may conclude that targeted support does not offer them these advantages, is not appropriate for their customers or does not complement their existing products and services. 

All firms considering targeted support should recognise that it introduces new areas of judgement and potential exposure if poorly designed or controlled.

Key questions for any firm considering targeted support include:

• Which customers, current or prospective, may benefit from targeted support? 
• Which of our products and services are appropriate vehicles for targeted support, and what are the ‘better positions’ to which customers could move?
• How will we determine the scenarios and customer segments for targeted support, and how will we establish that the proposed course(s) of action are generically suitable for them? 
• What are the commercial or strategic benefits to us of offering targeted support, and how will we assess these?
• Will we charge customers for providing targeted support, or should we offer it at no cost?
• How will we be clear with consumers that this is not advice, and test that prospective customers understand this?
• How will we extend our product governance arrangements, Management Information and other oversight, risk management and controls to oversee targeted support?

There are opportunities and risks, both commercial and regulatory, in moving quickly to deliver targeted support. Equally, there are risks in falling behind competitors who establish these services earlier and more successfully.

There are also clear data and technology implications. Firms that rely on digital tools, algorithms or analytics to deliver targeted support, will need confidence in the quality of underlying data, transparency of decision logic and the ability to explain how outcomes are achieved. These considerations align closely with broader expectations around data governance, model risk and consumer understanding.

Taking the first steps

Any firm intending to offer targeted support will need to apply for the relevant regulatory permission and be granted approval by the FCA. Subject to legislation, the application gateway is expected to open from March 2026.

Beyond regulatory permissions, firms will need to make a series of practical judgements before launching targeted support. These include identifying which customer segments may benefit, which products or services are appropriate vehicles for targeted support, and how proposed courses of action can be shown to be generically suitable for those segments.

Many firms are likely to start with relatively simple or lower-risk scenarios and expand over time as confidence, capability and evidence of outcomes develop. This staged approach allows firms to test governance, controls, training and oversight arrangements before scaling more widely.

Compliance and Internal Audit functions will play an important role in providing challenge and assurance, testing whether targeted support remains within regulatory boundaries and delivers the intended outcomes. The FCA has been clear that it will monitor how firms use the framework in practice, with a continued focus on consumer outcomes rather than formal classification alone.

Targeted support represents a significant shift in how firms can engage and support retail consumers. Firms that embed it as part of their wider Consumer Duty operating model, rather than treating it as a standalone initiative, will be better placed to manage risk while improving consumer outcomes.

For more information on targeted support, contact Peter Lovegrove.