Pension professionals have broadly welcomed the Financial Conduct Authority’s (FCA) consultation to introduce targeted support for pensions as part of the Advice/Guidance Boundary Review but raised concerns over regulatory restrictions and costs.

The FCA’s consultation on how it can take forward a new type of support for consumers with their pensions, called targeted support, as part of its Advice Guidance Boundary Review closes today (13 February).

Industry experts called the plans to introduce targeted support for non-advised pension savers a “positive step forward”, with many recognising its potential to improve consumer outcomes.

In particular, the Society of Pension Professionals (SPP) acknowledged the plan's benefits, including offering ready-made solutions and its potential for reducing consumer harm.

However, the organisation also highlighted key concerns, particularly the need for greater clarity around the scope of support, access to pension information, and responsibility between providers and customers.

The SPP Financial Services Regulation Committee chair, Amanda Cooke, said “the devil really is in the detail” regarding this consultation.

“It’s important for industry and consumers that the FCA gets this right, especially in the context of other current workstreams focussed on retirement planning,” she added.

Accessibility

However, there have been a number of concerns raised, particularly around accessibility, as Quilter CEO, Steven Levin, said the FCA’s plan could help millions of people who struggle to access financial advice due to perceived affordability constraints or lack of awareness.

He emphasised that the framework would allow firms to offer structured support without crossing into full regulated advice, potentially helping larger numbers of consumers navigate their investment and pension choices with greater confidence.

Furthermore, the SPP stressed that for target support to be effective, firms need access to members’ wider pensions savings information.  

Aegon pensions director, Steven Cameron, pointed out the challenges firms face in reaching out to consumers for financial support, highlighting the Privacy and Electronic Communications Regulations (PECR) as a limitation.

“We believe there is justification for exempting firms with certain FCA-regulated permissions from the scope of PECR,” he added.

Cost and Fees

In addition to this, the SPP also raised concerns over the fees and cost of targeted support.

“Ultimately it will be up to firms to decide whether they are able to offer a targeted support service to customers free of charge or to charge an appropriate fee,” the SPP said.

“Much would depend on the final regulatory framework that is introduced, but large product providers are likely to seek to recover the costs of providing a targeted support service through some form of cross subsidisation.”

Royal London director of policy, Jamie Jenkins, said that targeted support “should be free at the point of access” to ensure accessibility and its success should be measured on the value it provides in doing so.

“Any firm planning to measure the success of targeted support on the volume of product sales has missed the point, and perhaps misunderstood the essence of the consumer duty,” he said.

Levin also raised concerns about affordability and emphasised that firms must have the flexibility to establish their own charging structures.

“If upfront fees are mandated, many of the people who stand to benefit most from targeted support may be discouraged from using it altogether,” he continued.

“Ensuring that the framework is commercially viable for firms while remaining accessible for consumers will be critical to its success.”

Sackers partner, Jacqui Reid, said that creating greater consumer accessibility that does not require them to pay for advice to help them to make informed decisions about whether they are saving enough for and during their retirement was important.

Risk considerations

The SPP also expressed the need to consider member concerns about risk, as it said that “decisions concerning investments and life-changing sums of money can involve uncertain outcomes and unintended consequences (such as tax, or loss of investment returns), even where appropriate support has been provided”.

Given this, the organisation argued that providers would need clarity concerning how responsibility for “complex decisions” will be allocated between providers and consumers if they offer targeted support.

It warned that if firms believe they are unable to put adequate controls in place to manage the risks, they may decide not to provide targeted support.

Levin argued that consumer protection must be at the “heart” of this framework.

“Targeted support should only be provided by firms with the appropriate regulatory authorisation, ensuring high standards of conduct and preventing bad actors from exploiting the system,” he emphasised.

Regulatory flexibility

Cameron argued that without regulatory clarity, firms may be reluctant or unable to fully implement targeted support.

He also said that Aegon is “keen” for the FCA to retain as much flexibility in regulations as possible as it would allow the industry to innovate and meet changing consumer support needs.  

In particular, Aegon called for the FCA to allow adviser firms, not just pension and investment providers, to apply for the necessary regulatory permissions, with fast-track approval for existing regulated firms. 

Cameron also stated that Aegon would welcome FCA examples to illustrate this potential scope, including possible scenarios, customer segments, and ready-made solutions to encourage the industry to come up with “innovative” services.

However, he stressed that it would be “essential” that the Financial Ombudsman Service (FOS) offers assurances over how it will differentiate between its expectations for full advice and the less personalised suggestions from targeted support.
    
Levin also suggested that to ensure the success of target support, it must be flexible and responsive to consumer needs.

“While regulatory guidance is important, overly prescriptive rules risk stifling innovation and making the framework too rigid to adapt to real-world consumer challenges,” he continued.

“The ability to test and refine targeted support approaches in collaboration with the FCA and FOS will be key to ensuring they remain effective over time.”

Reid said that while these proposals are not intended to apply to trustees of occupational pension schemes directly, Sackers understands that the FCA is working closely with the Department for Work and Pensions and The Pensions Regulator to either extend them to trustees or provide something similar in the trust space.

However this is done, she stressed that it would be “imperative” that trustees can still have the flexibility to support their members with pensions guidance, without straying into the sphere of regulated advice.

“Parameters will need to be carefully and clearly drawn as grey areas can encourage a risk-averse approach which, ultimately, constrains the help provided to consumers,” she argued.

Relationship to financial advice

Jenkins argued that targeted support should be a complementary service to financial advice, not a replacement for it.

“It should be centred around providing constructive help, rather than the current approach of simply warning people about the consequences of all the poor decisions they could make,” he continued.

Cameron said: “While targeted support will never replace the value of full financial advice with personal recommendations, there are millions of non-advised individuals who could benefit from a suggested way forward, appropriate for people who share common characteristics with them.

“Many who would benefit from this service may go on in future to seek full financial advice.”

Meanwhile, Levin suggested that targeted support will be most effective when combined with other initiatives such as simplified advice and holistic advice.

He said this could “create a full spectrum of support for consumers” and stressed that no single solution will close the advice gap entirely.

However, he argued it is important to distinguish between targeted support and holistic financial advice, suggesting that those already receiving ongoing financial advice should have a holistic plan and thus not need targeted support.

“The new framework should focus on helping those who would otherwise struggle to access support,” Levin said.

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