The Financial Conduct Authority (FCA) has published a consultation on proposals to introduce targeted support for pensions as part of the Advice/Guidance Boundary Review.

The consultation sought views on allowing firms to provide targeted support to consumers in different scenarios, such as if they find someone is drawing down their pension unsustainably or is uncertain about how to take their retirement income.

Under the reforms, firms will be able to provide groups of consumers who share the same characteristics with a bespoke suggestion.

While holistic advice is based on an individual’s detailed circumstances, the targeted support model would provide suggestions that are not optimised for the individual, which the FCA said was required if pension support was going to be scalable.

It has therefore proposed ‘proportionate standards’ for firms looking to provide targeted support.

The FCA also proposed that targeted support for pensions would be provided for free.

The regulator is not consulting on new rules at this point, as it felt the “significant change” its proposals entailed meant it should first focus on the proposed direction of regulations.

Rules that would create a new framework are expected to be consulted on in the summer of 2025.

Further measures introducing similar concepts of targeted support and simplified advice for other retail investments will be proposed next year.

The FCA described the new consultation launch as a “significant moment”, as the reforms to the advice/guidance regulatory framework will “set the standards for years ahead”.

It also asked for views on any potential unintended consequences of the proposals, with the consultation closing on 13 February 2025.

The consultation is part of the FCA’s wider Advice/Guidance Boundary Review, which aims to tackle the gap between tailored finance advice and guidance to support consumers in making more informed financial decisions.

To achieve this, the regulator is seeking to help people have access to more help, support and advice across all aspects of their financial lives.

It found that 75 per cent of over-45s did not have a ‘clear’ retirement plan and only 9 per cent of adults had taken full, regulated advice in the past 12 months.

Alongside its targeted support consultation, the FCA sought views on whether there were any other areas of its regulatory framework that may need to be reformed to enable firms to better support consumers.

It has published a separate discussion paper on whether further changes might be required to better support consumers, such as to the use of digital tools, requirements for defined contribution scheme transfers and consolidation, and rules regarding self-invested personal pensions.

“We want people to have access to the help, guidance and advice that they need, at a cost they can afford, when they need it, so that they can make informed decisions,” said FCA executive director of consumers, competition and international, Sarah Pritchard.

“So, we are reviewing the boundary between guidance and advice across investments.

“We know people find pensions particularly difficult to understand, so we are deliberately starting with this to help consumers with their pension decisions.

“If we get this right, consumers will be better supported in making financial decisions. This will potentially lead to more people investing which will help provide capital necessary to stimulate economic growth.”

This article originally appeared in our sister publication Wealth Investment News.

---