The wealth and financial advice industries have welcomed the Financial Conduct Authority’s (FCA) targeted support proposals, while highlighting the importance of the offering forming part of a wider advice ecosystem.

The FCA’s consultation, which closed on 29 August, proposed that firms will be able to offer targeted support to consumers and provide suggestions to groups of consumers with common characteristics.

St. James’s Place director of public policy, James Heal, said that targeted support was a welcome step to bridging the advice gap and the FCA’s approach showed “real progress”.

However, he warned that rules on how firms handle additional volunteered information risked making delivery impossible in person, and argued that a simple playback mechanism, where customers confirm they share the common characteristics the support is built on, would solve this.

“Simplified advice must also be part of the picture,” Heal added. “Today it sits too close to full advice to work at scale.

“A more distinct, proportionate regime could bridge the gap between targeted support and personalised advice, while opening up new pathways for future advisers.

“Ultimately, targeted support can only succeed within a wider ecosystem from financial education and guidance, through targeted support and simplified advice, to full personalised advice.”

Quilter CEO, Steven Levin, also welcomed the proposals, and stated that targeted support had the potential to be a transformational shift in how the financial services industry reached people who fall outside the scope of full financial advice.

“If designed and implemented well, it could deliver better long-term outcomes for underserved customers and give them the tools they need to take control of their financial future,” he continued.

“But to realise that potential, it is vital that the framework is built on clear rules, workable processes, and a regulatory environment that provides both consumers and firms with the confidence to engage.”

Levin noted that a critical enabler for the initiative would be the creation of a genuine ‘safe harbour’ for firms providing targeted support, as they faced the risk of hindsight regulation without alignment between the FCA and Financial Ombudsman Service (FOS).

“Safe harbour protection would give firms the confidence to innovate, make proportionate recommendations, and focus on good customer outcomes without fear of retrospective challenge,” he said.

“It is essential that the regulator sets out transparent assessment criteria so firms can operate with certainty from day one.”

Other enablers highlighted by Levin included clear guidance on data use to help firms find and engage the right customers without inadvertently providing personal holistic advice, and reforms to direct marketing rules so timely interventions were possible.

“We believe well-run advice networks should be able to deliver targeted support through their appointed representatives, enabling it to be scaled quickly without compromising standards,” he stated.

“However, targeted support cannot work in isolation. It should form part of a broader ecosystem that includes greater access to financial education and reforms to disclosure rules, so they inform rather than intimidate.

“The regulator should ensure that any measures are designed to encourage participation rather than create unnecessary barriers.

“A robust safe harbour framework, coupled with proportionate regulation and a focus on education, is the best way to encourage innovation, build trust, and genuinely narrow the advice gap."

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