For years, the FCA has wrestled with how to bridge the UK’s ‘advice gap’ – and yet the reality is that financial advice still remains out of reach for most people. According to the FCA’s consultation paper only around 9% of adults took regulated advice on their pensions or investments in the past year – leaving millions to muddle through decisions about pensions, savings and investments on their own.
The reasons vary. Some can’t afford advice. Some don’t think they need it. Others feel too daunted to take the first step. The result is often inertia. The FCA’s paper also highlights that 61% of adults with over £10,000 in investable assets keep most of it in cash rather than investing, even if it means missing out on long-term returns. Many stick with default options, unsure of how or when to make a change.
The FCA’s proposed targeted support framework aims to bridge that gap. The consultation period has just closed, with a policy statement expected by the end of the year. If introduced, it could create a middle ground between generic guidance and full personalised advice.
What is targeted support?
Targeted support allows regulated firms – like pension providers and other large companies – to use the data they already hold on customers to group them into sensible segments and give them tailored nudges and suggestions to improve their financial outcomes.
Think of it as: “Customers like you often consider…” or “People in your situation usually do…” It’s more personalised than generic FAQs, but less tailored than full advice.
Until now, firms have been wary of giving this sort of guidance, because it would have strayed into the territory of ‘regulated advice’. With targeted support, the FCA is essentially creating a safe zone for these kinds of helpful nudges. By following the targeted support framework – defined segments, standard recommendations, upfront disclosures – firms can confidently guide customers through actions that are likely to be in their interest, without fear of overstepping the advice boundary. As long as they do so with good outcomes in mind.
Who will deliver it?
The FCA is clear that this isn’t an open invitation to everyone. It’s aimed at large, well-capitalised firms with the scale, customer base and infrastructure to do it safely. Firms will need explicit permission to offer targeted support, along with robust processes and a significant capital buffer. And because this involves retail customers making important financial decisions, it will sit firmly under the umbrella of Consumer Duty. Providers will need to evidence that people receiving targeted support are making better decisions – and achieving better outcomes – than they would without it.
In other words, it’s the pension providers, life companies and direct-to-consumer platforms who will likely be leading the charge.
Why it matters?
If it works as intended, the potential upside is huge. By creating a middle ground between generic guidance and full advice, the FCA is unlocking opportunities for firms to engage their customers in ways they’ve hesitated to before.
Just imagine what positive steps customers might take if given gentle prompts and personalised education: consolidating stray pension pots (leading to lower fees and less confusion), upping their savings rates when affordable, steering clear of knee-jerk sells during market dips, or combatting inflation by putting idle cash to work in the markets. These are relatively simple interventions that could meaningfully boost people’s long-term finances – yet under the current rules, providers are discouraged from intervening as it may count as regulated advice. The targeted support framework gives firms the green light (within clear boundaries) to proactively help their customers in this way.
It could also act as a stepping stone, gently guiding people towards regulated advice when it’s needed. Either way, the direction of travel is the same: more people supported, and better outcomes delivered.
Why technology is key
Delivering targeted support at scale will lean heavily on technology and data. Firms will need to capture and analyse customer information, spot patterns and risks, and integrate these insights into user-friendly digital journeys that deliver the right suggestions, at the right time. And that’s where technology comes in.
Firms built on a digital, API-first infrastructure will find it far easier to surface the data needed for segmentation, embed behavioural nudges, and meet reporting requirements, than those tied to siloed, legacy systems where data remains locked away. In this context, APIs aren’t just a technical feature; they’re the enabler that turns targeted support from a well-meaning idea into a practical, scalable reality.
Closing the gap
At Seccl, we’ve always championed using technology to lower barriers and improve customer outcomes. Targeted support is another piece of that puzzle: it aims to ensure no customer falls through the cracks, even if they aren’t ready or able to engage with a financial adviser. And, done well, it could transform engagement and outcomes for millions.
Yes, there are challenges: firms must design sensible segments, build robust processes, and avoid turning nudges into thinly disguised sales pushes. But it’s an opportunity to show that advice (broadly defined) doesn’t have to be the preserve of the wealthy few, but can be delivered digitally, at scale, and at low cost.
At Seccl, we’ll be watching developments closely – and with real interest. If the framework becomes reality, we believe it could mark a step-change in how millions of people engage with their money, helping to close the advice gap and build the more confident savings and investing culture that the UK needs.