The Financial Conduct Authority's (FCA) consultation on supporting consumers’ pensions and investment decisions: proposals for targeted support - Which? response

Which? welcomes this opportunity to respond to the latest iteration of the FCA’s proposals for targeted support and the broader advice and guidance landscape. As the UK’s consumer champion, we are focused on ensuring that new advice services, like targeted support, lead to better consumer financial decisions, especially for vulnerable groups, while also mitigating the risk of unsuitable recommendations that could lead to poor outcomes. 

Positively, the latest iteration of the FCA’s proposal for targeted support starts to address some of this risk of consumer harm. It does this by proposing to establish targeted support as its own regulated activity that is subject to a balance of specific rules and higher level principles, with a discrete authorisation gateway, and with limits on some types of products that would require more individualised advice. 

However, the FCA must make further improvements to the proposal for targeted support if it is to properly mitigate the risk of consumer harm and provide the right level of consumer protection. This includes:

1. The design of targeted support needs stronger consumer protections to more proportionately respond to the high risk of consumer harm.
2. The implementation of targeted support needs to be phased, with fewer eligible scenarios at the outset, to allow the FCA and firms to test, learn and improve from lower-risk scenarios, minimising the potential scale of harm to consumers if things go wrong. 

More broadly, the overarching ‘continuum of consumer support’ put forward by the FCA needs to be more accurately developed and communicated. Making this clearer is instrumental to supporting better consumer understanding of the distinct purposes of targeted support, simplified advice and holistic advice, and will potentially support more appropriate consumer take up of each service. Specifically, the suitability requirements for simplified advice, where individualised tailored advice is given, should be more akin to those for holistic advice, than targeted support, a cohort-level suggestion.