Targeted Support: Why PECR shouldn't be a barrier to roll out

On 30 June 2025, the FCA published a Consultation Paper (CP25/17) with proposals for detailed rules governing a new regulated activity of "providing targeted support". Targeted support is intended to democratise the financial advice market and encourage those retail savers to move into the retail investment market, with a new regulated activity that relies heavily on behavioural nudges while heavily reducing the regulatory burden on firms themselves. Supported by government, targeted support is seen as a cornerstone of the growth agenda.

However, with the publication of the details of the new regime, industry discussion has arisen around a potential conflict between the targeted support framework and existing rules under the Privacy & Electronic Communications (EU Directive) Regulation 2003 (PECR) and associated guidance from the Information Commissioner's Office (ICO), if (which is likely) targeted support messages are provided by email.

Concerns have been raised that firms cannot effectively provide targeted support via electronic marketing channels without legislative changes to PECR.

These concerns are, in our view, predicated on a false characterisation of targeted support as a form of marketing rather than a service provided to consumers in its own right. In this article, we consider the legal path forward for firms (without legislative change) to provide targeted support whilst navigating their obligations under PECR.

What is targeted support and why is it being introduced?

We have discussed the targeted support framework at length in a previous article here.

Broadly, targeted support will be introduced as a new regulated activity in the UK – proposed Article 55A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), set out in a draft statutory instrument and accompanying policy note published by HM Treasury on 15 July 2025.

This regulated activity will allow appropriately FCA-authorised firms to make specific recommendations designed for groups or cohorts of consumers (known as "consumer segments"). Targeted support will allow firms to direct consumers to products that would deliver better outcomes for them.

One of the policy drivers behind targeted support is to encourage more consumers to deploy cash into investments. In CP 25/17, the FCA (drawing on data from its Financial Lives Survey (2024)) highlighted that of the 7 million adults who had £10,000 or more in investible assets held solely in cash who had not received regulated financial advice in the last year:

• 24% say they do not invest because they don’t know enough about investments;
• 12% do not invest because they feel overwhelmed by the number of options available; and
• 8% say they would like to invest but need support

As such, targeted support will be particularly apt for consumers who would not otherwise seek full investment advice services, and will be of interest to financial services firms targeting mass-market retail clients.

In practice, services might be provided through (for example) in-app push notifications, emails or other online communications to clients.

It is important to highlight that steering consumers to invest "excess" cash savings in investments is a highly political topic, and is an objective that has been consistently pushed by the Chancellor of the Exchequer in her pursuit for economic growth and illustrated by the much discussed proposals to lower the cash ISA threshold.

Does targeted support conflict with PECR?

In the course of industry discussions, a question has arisen of whether targeted support is consistent with requirements under PECR.

Under the FCA's proposals, targeted support would operate on an opt-out basis: proposed COBS 9B.5.14R requires firms to "provide the means by which a client can, at any time, elect not to receive targeted support from the firm."

However, Regulation 22(2) of PECR generally prohibits unsolicited "direct marketing" communications by electronic mail without the consent of the recipient. There is a limited exception for firms' customers known as the "soft opt-in" where marketing can be undertaken on an opt-out basis if certain conditions are met.

This means if a targeted support communication constitutes "direct marketing" under PECR, then there is a potential conflict with the "opt-out" nature of targeted support.

For all new customers, if firms get their marketing consent on the basis of the "soft opt-in" (i.e. you are automatically opted-in unless you opt-out) the two regimes can work without conflict side by side. The issues arise for the current book of business of customers who may have already actively opted out of marketing.

If targeted support communications are considered a marketing communication, how can targeted support messages be sent to those customers who have opted out of marketing?

With this issue in mind, we are aware that some stakeholders are requesting HM Treasury to consider legislative amendments (for example, in the upcoming Pension Schemes Bill) to allow the government to make an order that the conditions in Regulation 22(3) PECR are deemed to be met when a firm, which is authorised to do so, provides targeted support under Article 55A of the RAO.

Can targeted support be reconciled with the PECR framework?

This position described above is based on the inconsistency between (on the one hand) the policy intent of the FCA to make targeted support available to a wide range of people, via an opt-out basis, and (on the other) the policy intent of the ICO to ensure that electronic direct marketing communications are sent to individuals who wish to receive them.

Firstly, the most stringent PECR rules only apply to electronic marketing and targeted support could be provided by other methods such as post, telephone and push notifications in the absence of consent.

Secondly, we consider this view is also based on a false assumption that targeted support will de facto always constitute direct marketing communications. Under this interpretation, targeted support is characterised as a licence to issue marketing communications to consumer segments.

By contrast, the definition of targeted support requires a firm to "make a recommendation" to an individual and to be "presented as suitable for the individual". It is an over-simplification to automatically characterise targeted support as a form of marketing. We consider targeted support is itself a form of service, and a number of factors point towards this:

1. By definition, targeted support is a type of recommendation or advice (in the ordinary meaning of the word – not the regulated sense). Indeed, currently firms tend to avoid making such recommendations to customers as they could constitute a form of investment advice including personal recommendations.
2. Firms providing targeted support will require FCA authorisation under proposed Article 55A of the RAO. From the perspective of UK financial services law, we would not consider services provided pursuant to FCA authorisation to be a form of "marketing". By contrast, a firm making a "financial promotion" (under section 21 of FSMA) does not necessarily require FCA authorisation – it can rely on an approval by an authorised firm.
   
   It follows that HM Treasury considers targeted support to be a service rather than promotional marketing, otherwise there would be no need for a new regulated activity and such communication could be made under the existing financial promotions regime.
   
   
3. Under the proposed FCA rule COBS 9B.8.1G(1), "[a] firm may elect whether to charge a client for provision of targeted support".

The ability to charge fees for provision of targeted support indicates that targeted support is a service. On the contrary, a firm would not charge a customer in order to provide a marketing communication to that customer.

By way of analogy, it is implausible that an existing authorised investment advisor would be considered to be providing direct marketing communications to its clients under PECR where it communicates with them via email about a financial product which may be appropriate for them.

To argue the contrary would be to argue that PECR prevents clients from receiving the very service they have contracted to receive (and pay for), unless they have expressed their interest in receiving direct marketing.

When considering targeted support in this way (as a form of service rather than marketing) it is clear that it is possible to navigate the suggested conflict between the provision of targeted support and PECR.

This is because PECR does allow firms to provide "service messages" to clients without requiring consent. Under ICO guidance, the concept of a service message "covers messages that aren’t promotional but are for administrative or customer services purposes, such as messages to: […] update [customers] on your terms or conditions."

Where a client has contractually agreed to be provided with targeted support as a regulated financial service, communications entailing the provision of targeted support could be characterised as a "service message" for PECR purposes, so long as they are not promotional in nature. This is because the provision of such support could be considered necessary to administrate that service and the provision of the recommendation that underlies it.

ICO guidance on the distinction between service messages and marketing messages states "messages that have a neutral tone and simply give information they need to know as part of their relationship with you is more likely to be a service message." The key to staying on the correct side of data privacy laws will be in the phrasing and tone of the communication.

Proposed workflow for firms

In order to rely on the pathway set out above, it is critical that firms include the provision of targeted support as a service to clients as part of their contractual terms and conditions. The implementation workflow for firms looking to provide targeted support would therefore be broadly as follows.

1. Obtain targeted support permission: Currently, it is expected that the authorisations gateway for targeted support will open in March 2026. From this point, firms will be allowed to apply for FCA permission to provide targeted support (for instance, through a variation of permissions form for already-regulated firms). Based on a March 2026 application date, firms might expect a decision on approval by H2 2026.
2. Update terms of business: Firms should update their terms of business with clients. Language should be added to reflect that services provided by a firm may include targeted support.
3. Provide targeted support services: Once regulatory permission is obtained – likely earliest H2 2026, as set out above – targeted support messages to current customers can provided in the way described below: