The FCA published CP25/17 on 30 June 2025 to great fanfare - declaring it "a once in a generation chance" and "landmark work". CP25/17, the FCA's consultation on Supporting consumers' pensions and investment decisions: proposals for targeted support, is the latest step in the FCA's work to address the so-called "advice gap", being the state of affairs in which few retail investors have accessed investment advice over the last decade or so.
The proposals set out: (a) a new regulated activity of "targeted support" for retail investments and pensions; and (b) a new concept of "simplified advice".
CP25/17 is on an accelerated timeframe. It will close to responses on 29 August 2025, after eight (rather than the more usual twelve) weeks. The FCA aims to publish a policy statement and final rules by the end of the year. It expects to open the authorisations gateway, through which firms can apply to carry on the new regulated activity of targeted support, in Q1 2026.
In this blog, we consider some key aspects of the CP25/17 proposals and the potential market impact.
The bigger picture
CP25/17 is set within the wider context of various FCA initiatives that have sought, over the years, to reform the UK investment advice sector, notably the Retail Distribution Review (RDR) and the Financial Advice Market Review. However, FCA evaluations of these initiatives, including consumer research, have identified that many consumers still struggle to make decisions about accessing their pensions, or saving and making investments.
The Advice Guidance Boundary Review was launched by the Government and the FCA in 2022 to consider the regulatory boundary in relation to regulated financial advice and other forms of support. Targeted support is being taken forward under the Advice Guidance Boundary Review and CP25/17 is the latest in a series of Advice Guidance Boundary Review-related consultation exercises.
What is targeted support?
Targeted support represents a new form of support for consumers to help with financial decisions about pensions and retail investments. On the information/guidance to regulated advice continuum, it will sit between existing guidance and information services (i.e. generic) and full financial advice (i.e. bespoke). It will enable firms to provide "ready-made suggestions" that are designed for groups of consumers in a common situation and, where relevant, with common characteristics. Each such group is referred to by the FCA as a "consumer segment". The ready-made suggestions will relate to a particular product or course of action.
In CP25/17, the FCA proposes the following process for designing and delivering targeted support journeys:
- Firms will pre-define "situations" in which to provide targeted support.
- Firms will pre-define consumer segments. They must ensure that, in each situation, it is only possible to align a consumer with one consumer segment.
- Firms will pre-define a ready-made suggestion for each consumer segment within a situation.
- Firms will deliver the ready-made suggestion to a consumer aligned to the consumer segment.
Targeted support may be provided at the request of a consumer or at the firm's initiative. However, for a firm to deliver targeted support at its own initiative it must have reasonable grounds to consider that its customer is in one of the pre-defined situations with a common financial support need or objective.
Notably, the FCA's proposals hinge on the purpose of targeted support as being to achieve "better outcomes" for consumers. In this context, better outcomes means "putting consumers in a better place in their financial lives", and the FCA intends that this aim will guide firms' approaches to targeted support design and delivery.
The FCA acknowledges that there is a trade-off: targeted support suggestions may not be as beneficial as more personalised recommendations given through advice provided to an individual consumer, which is often only available at a price. However, the FCA explicitly states its willingness to accept this trade-off, not least because it has identified that many consumers who do not receive support are experiencing harms.
There is also the possibility that targeted support acts as a "stepping stone" (to use the FCA's language) to simplified advice or more comprehensive investment advice, where a firm's customers want or need this.
Targeted support: the proposed legislative framework
The FCA considers that, under the current Financial Services and Markets Act 2000 (FSMA) regulatory framework, targeted support in its proposed form would fall within the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) definition of a "personal recommendation". It believes that existing requirements on firms providing personal recommendations would make it hard for them to establish targeted support models and describes it as "crucial" for targeted support provision to be regulated differently to existing forms of advice.
To enable this, as part of the "Leeds Reforms" announced in the Chancellor's Mansion House 2025 Speech on 15 July 2025 (see our blog for more information), the Government published a policy note and draft statutory instrument (Draft SI): the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2025. The Draft SI:
- Creates a new specified activity of providing targeted support (through the addition of a new Article 55A in the RAO).
- Sets out that, in providing targeted support, a firm is not "advising on investments" under Article 53 of the RAO.
This will, as the FCA explains in CP25/17, establish targeted support as a new regulated activity in respect of which a Part 4A FSMA permission will be required (including where a firm has an existing permission to provide investment advice).
Personal recommendations that are not provided in line with the targeted support definition will continue to be regulated under Article 53 of the RAO, as applicable.
Comments can be made on the Draft SI until 29 August 2025. In particular, in the policy note, HM Treasury raises the following topics:
- Whether there is a sufficient distinction between the proposed new targeted support regulated activity and the Article 53 RAO regulated activity.
- Whether the exemptions and exclusions that apply to the Article 53 RAO regulated activity should be applied to the new targeted support regulated activity.
- Whether any transitional provisions or consequential amendments are considered necessary.
On the question of whether appointed representatives will be able to deliver targeted support, HM Treasury notes that this would require further legislative change (i.e. to the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001). It suggests that stakeholders may wish to provide their views on whether appointed representatives should be able to do so, and adds that it will consider feedback provided to CP25/17 on this matter.
The Government intends to legislate in 2025, subject to feedback on the Draft SI and Parliamentary time allowing.
Targeted support: the proposed regulatory framework
A new regulatory framework is proposed for targeted support and, in very broad terms, the framework covers conduct standards, communications, costs and charges, application of existing requirements, complaints and redress (these are joint proposals with the Financial Ombudsman Service (FOS)), direct marketing rules, and approach to authorisations and measuring success. The FCA is seeking to rely, where possible, on existing requirements, underpinned by the Consumer Duty, but the existing suitability requirements in the FCA's Conduct of Business Sourcebook (COBS) 9 and 9A will not apply to targeted support. Instead, a new standard of suitability set out in new COBS 9B will be relevant.
There is a great deal for firms to digest here, but some of the key aspects of the proposed framework and conduct standards include:
- The FCA is proposing new outcomes-focused conduct standards with the aim of providing clarity to firms through a high-level framework that gives them flexibility to tailor, and confidence to deliver, targeted support journeys that work best for their customers.
- The draft rules, in conjunction with firms' existing obligations under Principle 9 and the Consumer Duty, are designed to ensure that consumers receive suggestions that are suitable.
- Firms are not required to offer targeted support as a prerequisite to demonstrating compliance with the Consumer Duty. However, firms providing targeted support must treat all recipients as retail customers and the Consumer Duty will apply to the design and delivery of all targeted support. The FCA highlights in CP25/17 the key components of the Consumer Duty that will be particularly relevant for firms when designing and delivering targeted support.
The FCA is seeking to future-proof its rules as much as possible. It wants to ensure, for example, that any rules developed for targeted support do not act as a barrier to the safe and responsible use of AI.
Targeted support: who will offer it?
Although the FCA does not anticipate that all firms will offer targeted support, our view is that CP25/17 is a significant step towards opening up the regulated investment advice market. The proposals should see innovation and enhancements in non-advised intermediary offerings by a range of firms. The obvious attraction of the proposed targeted support activity for firms that both manufacture products and directly face retail, is that they can steer people towards their own (suitable) products via "ready-made suggestions". We may also see more strategic collaborations between retail facing intermediary firms and product manufacturers in this regard.
But this is not risk-free and firms that look to offer targeted support will need sensible and prudent governance frameworks and controls. Firms will need to map consumers to consumer segments - and although this categorisation is sensibly couched in the firm having "reasonable grounds", it will become trickier if a firm has additional information on a consumer over and above that of the common characteristics of that pre-defined consumer segment - firms will need to take that into account when considering suitability. This new approach will also need active support from the FOS, so that the application of its "fair and reasonable" jurisdiction to future complaints does not, in effect, erase or undermine the distinction between the proposed categories of advice.
What is simplified advice?
In contrast to targeted support, the FCA describes simplified advice as a personal recommendation, focused on a consumer's specific need and assessed as suitable for an individual taking account of essential information relevant to that need. Simplified advice therefore takes a narrow approach and is distinct from, and complementary to, both targeted support and full advice.
Existing FCA suitability rules in COBS 9 and 9A allow firms to provide advice that is broad or narrow. However, despite FCA guidance on streamlined advice (FG17/8) and earlier policy interventions, there has been no widespread adoption of simplified advice models. The FCA accepts in CP25/17 that inconsistency in terminology and previous proposals may have led to confusion on the part of firms, and it recognises it could provide greater clarity in this area.
In light of its targeted support proposal and feedback to its December 2023 Advice Guidance Boundary Review discussion paper (DP23/5), the FCA plans to publish a consultation paper in January 2026 on amendments to COBS 9 and 9A, to create a clearer distinction between simplified and more holistic advice. Through this process, the FCA will seek to remove ambiguity, ensure conduct requirements are outcomes-focused and risk-based, and give firms greater flexibility to develop and deliver appropriate advice propositions to meet different consumer demands and needs. It will also review the rules relating to ongoing advice.
Again, the FCA will be relying on the Consumer Duty as much as possible and also acting in line with its wider strategy of reviewing and simplifying Handbook requirements (see our blog on the FCA's March 2025 Consumer Duty feedback statement (FS25/2) for more information).
Importantly, the FCA considers that this approach will encourage innovation as firms seek to develop more efficient means of delivery, including through greater use of technology (for example, automated and hybrid models).
Clarifying the advice guidance boundary
Annex 1 to CP25/17 sets out the FCA's proposed approach on further clarifying the advice guidance boundary. The FCA intends to consult on consolidating, simplifying and clarifying existing guidance on the advice guidance boundary. It will do this at the same time that it sets out new perimeter guidance for firms providing targeted support.
Conclusion
There is a sense in the market that these proposals do represent a genuinely substantial shift that could have a real impact on how we in the UK invest. As the FCA explains in a related press release, it wants to see a "thriving and trusted market for full financial advice, simplified advice, targeted support and guidance." Its vision is for well-informed investment and pension decisions to become the norm. Not only will this help consumers over the short and longer term, but increased market participation will release capital that will drive the UK economy and boost growth - a key strategic priority and a secondary statutory objective for the FCA (see our blog for more information).
We expect high levels of engagement with CP25/17 and broad support for the direction of travel in which it is heading.
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