The Financial Conduct Authority (FCA) has outlined the next steps of the Advice/Guidance Boundary Review, including a consultation on targeted support for pensions in December.

It announced that the review, which seeks to improve people’s confidence in financial decision making and give them access to the relevant support, will first focus on pensions.

The regulator stated that consumers were increasingly having to rely on defined contribution (DC) pension savings and make more complex decisions in relation to these, including how to access their pension savings.

Therefore, in December 2024, the FCA will consult on ‘high-level proposals’ for targeted support in pensions, which will enable firms it regulates to provide support to pension savers in a new way.

Building on this work, the FCA plans to consult on rules for better support for consumers in retail investments and pensions in the first half of 2025.

By the end of H1 2025, the FCA plans to develop related proposals for targeted support in relation to wider investments, and consult on the draft FCA rules that will apply across consumer investment and pensions.

The FCA also published a statement with The Pensions Regulator (TPR) and the Information Commissioner’s Office, which aims to give firms greater clarity on communications they can make to help pensions and retail investment customers.

In its update on the Advice/Guidance Boundary Review, the FCA noted that a majority of respondents felt that targeted support offered the best way of helping consumers at scale.

While respondents also saw a role for simplified advice, they recognised that it may not meet the demands of the mass market, and some suggested that it was needed in conjunction with targeted support for those who cannot afford, or do not want, holistic advice but need additional help.

Furthermore, there was interest shown towards the proposal of the FCA further clarifying the boundary between regulated financial advice and unregulated guidance, but there was recognition that this on its own was unlikely to resolve the support gap.

“We will continue our engagement with firms and through our other statutory panels, industry working group and trade bodies,” the FCA stated.

“We want firms to consider how they can better support their customers, and we want to collaborate with them to test options. We are working with our innovation function to support a more dynamic approach to policy.

“We will use the feedback to these consultations to finalise our proposals. There are different possible routes to delivering a targeted support regime, including through legislative change. The government and the FCA will keep these options under review as the proposals for this regime develop.”

Commenting on the update, St. James's Place chief operations and technology officer, Ian MacKenzie, said: “We are passionate advocates of personalised, face-to-face advice, and we strongly believe that increasing the availability of advice is key to addressing the advice gap.

"However, we also recognise the need for more to be done for consumers who do not currently receive any form of advice. The proposals around Targeted Support present an excellent opportunity—both for consumers and the industry—to bridge this gap.

“Targeted support should provide a framework that enables consumers to make better-informed decisions. If we clearly define what targeted support is—and, crucially, what it is not (i.e., it should not be mistaken for advice)—it has the potential to be far more beneficial to consumers than current guidance.

“There are likely to be multiple avenues for firms supporting retail investors to utilise these proposals in developing new services for those not yet ready to receive advice. We also see opportunities to assist clients who have invested but may no longer be receiving advice to help support their financial goals.

“We look forward to continue working with the FCA, the government, and the rest of the industry to finish shaping the designs of these important reforms and ensuring that they serve the needs of consumers and clients.”

This article originally appeared in our sister publication Pensions Age.

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