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, Standard Life retirement savings director, Mike Ambery, said: “The FCA’s move to consult on pensions targeted support next month is hugely encouraging.

"For far too long we have had both a financial guidance and advice gap, with a majority of people making critical financial decisions with limited support.

"While financial advisers provide a very valuable service, advice currently serves those who are in most cases relatively well off and less than 10 per cent of those approaching retirement receive advice.

"Of the solutions that have been proposed so far, targeted support is the most promising. By being able to work with customers to determine whether there are common actions that people in similar circumstances typically take, the industry should be able to provide customers with beneficial journeys that can help them maximise their retirement income.”

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