FCA revolutionises the retail advice market
04 July 2025

CP25/17: Supporting consumers’ pensions and investment decisions: proposals for targeted support
Make no mistake, this is a seismic paper. Despite the title of the paper, which indicates it focuses on "pensions" and potentially more familiar savings products, its scope is broad and it represents a symbolic moment for the FCA which is looking to materially reshape the way in which investment information and forms of advice are provided to the retail market.
The new rules will also help promote and encourage the use of AI and provision of relevant (and less generic) information to clients which has, to date, been stymied because of the uncertainty around the regulatory perimeter.
Ultimately the paper creates future rules and helps address the question "how much information can I give a customer about a product or service that might be useful to them without being worried that this amounts to advice?".
This paper also marks a material shift away from the European position of a "personal recommendation" and, although the retail investment package looks to bridge some gaps, without some significant change, the two regimes are going to be materially divergent.
On the whole, this paper and regime should be applauded and it is clear that the FCA is using the consumer duty in order to empower firms (as the FCA said it would). What will be interesting is to see the extent to which the FCA allows firms to move towards such models today (noting the new rules will not apply for quite some time and some of the requirements will require variations of permissions). Nonetheless, we suspect that the FCA will have a relatively flexible approach to firms offering many services that may fall into the new buckets today (however, legal and commercial risk may still preclude certain operators from loosening the belts at this point).
This paper is also materially important to neo-brokers (who traditionally do not provide advice) because it should allow them to provide more information and "signal type" services without falling into the bucket of "investment advice" and in many instances such services should not amount to "simplified advice" either and will be far closer to the idea of "targeted support".
We have set out a form of Q&A below that looks to digest the paper in a "simplified" (pardon the pun!) manner.
Yes! This paper is far wider than what many expected. It does not limit itself to pensions and saving products and seeks to revolutionise the way in which retail clients are given information, support and advice right across the investment spectrum (subject to a few restrictions (see question 8)).
Essentially it breaks what has traditionally been viewed as "investment advice" (requiring a full suitability assessment) into three options:
We now have a new set of definitions that relate to the activity of "targeted support". We have included a table below that looks at some of the key definitions that explain what targeted support is.
Term | Definition |
Providing Targeted Support | the regulated activity… |
Targeted Support | the service of providing ready-made suggestions to clients which are designed and delivered by a firm: (1) carrying on the regulated activity of providing targeted support; and (2) pursuant to the rules in COBS 9B (Targeted support). |
Ready-Made Suggestion | a recommendation specified, and made by a firm to a client, in the course of providing targeted support. |
Consumer Segment | has the meaning given in [COBS 9B.4.4R.] |
Common Characteristic | the including characteristics and excluding characteristics of a consumer segment. |
Including Characteristic | in connection with a consumer segment, a characteristic specified by a firm by reference to which an individual, who has that characteristic, may be aligned with that consumer segment. |
Excluding Characteristic | in connection with a consumer segment, a characteristic specified by a firm by reference to which an individual, who has that characteristic, is excluded from that consumer segment. |
See the table below. Importantly, as the rows towards the bottom demonstrate, the perimeter is now clearer.
Aspect | Streamlined Advice | Simplified Advice |
Personal Recommendation | Involves the provision of a personal recommendation to the consumer, based on information about their circumstances. | |
Limited scope | Designed to address a specific, limited consumer need rather than the consumer’s entire financial situation. Focuses on a particular issue or objective. | |
Proportionate Suitability Assessment | Allows for a proportionate approach to suitability: information collected and analysis performed are limited to what is necessary for the specific need or objective, not a full fact-find. | |
Consumer Protection | Subject to FCA suitability rules and Consumer Duty, ensuring recommendations are in the client’s best interests and consumers are protected from foreseeable harm. | |
Use of Automation and Technology | Can be delivered through automated or digital channels; use of technology is encouraged to improve accessibility and reduce costs, provided consumer protection is maintained. | |
Terminology and Regulatory Status | Umbrella term used in earlier FCA guidance (FG17/8) for advisory services (including simplified and focused advice) that provide personal recommendations limited to one or more specific needs. Not a formal regulatory category but a descriptive term for advice narrower than holistic advice | Used by the FCA (in CP25/17 and related work) to refer specifically to a form of regulated advice focused on a single, straightforward consumer need, with a regulatory framework being developed to distinguish it from holistic advice. |
Who sets the Boundaries | Includes both simplified advice (firm sets boundaries) and focused advice (client stipulates boundaries). | Generally defined by the firm, which sets the scope of advice to address a particular, straightforward need. |
Regulatory Clarity and Framework | Supported by guidance (FG17/8) explaining how existing rules could be applied flexibly, but did not create a distinct regulatory regime. | Now subject to a regulatory framework; FCA is proposing amendments and clarifications in COBS 9/9A to make it easier for firms to provide this type of advice and distinguish it from holistic advice. |
Scope of Suitability Assessment | Suitability assessment is limited to the specific need or objective, but guidance emphasises that client protection cannot be reduced; firm must still ensure recommendation is suitable even if scope is narrow. | FCA proposes it should be clearer that, for straightforward cases, firms can collect and assess only essential information relevant to the single need; suitability assessment can be proportionate to that need, reducing unnecessary complexity and regulatory burden. |
Practical Application and Market Adoption | Despite guidance, many firms were hesitant to develop streamlined advice propositions due to perceived regulatory uncertainty and concerns about the boundary with full advice. | FCA’s proposals aim to remove ambiguity, provide more flexibility, and encourage firms to innovate and offer commercially viable simplified advice propositions for consumers with straightforward needs. |
Yes. Firms wishing to provide targeted support will need to apply for a Variation of Permission (VoP) or, if not already authorised, a new authorisation. This is because targeted support will be a new specified regulated activity under the Financial Services and Markets Act 2000 (Regulated Activities) Order.
Firms must submit a VoP application (or a new firm application) to the FCA, providing details of their business plan, how they will identify and segment customers, develop suitable ready-made suggestions, and ensure ongoing compliance. The FCA will review the firm’s systems, controls, and readiness to deliver targeted support. The authorisations gateway will open before the rules come into effect, and the FCA will offer pre-application support to help firms prepare high-quality applications.
If a firm is already authorised to provide investment advice, it does not need a separate permission to provide simplified advice. However, if a firm is not already authorised for investment advice, it would need to obtain the relevant permission. The FCA is consulting on clarifying and simplifying the rules for simplified advice to make this clearer.
As a point to note, there are some restrictions in the paper with respect to higher risk products. In short, providing "targeted support" generally does not include where such support relates to complex products. Therefore, investments that are subject to restrictions on retail distribution are generally restricted from being included in the defined term of "Ready-Made Suggestion" under the targeted support model (see the first table above).
No. The FCA does not propose to introduce specific qualification requirements for employees providing targeted support.
The consultation closes on 29 August 2025. The FCA aims to publish a policy statement and final rules by the end of 2025, subject to the volume and nature of feedback received. The authorisation gateway for targeted support will open before the rules come into effect, allowing firms to prepare in advance. The indicative timeline suggests implementation in early 2026.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.