Targeted support: final rules

December 2025

The FCA has published its policy statement on targeted support. This article unpacks the key implications of the near-final rules and provides a steer on next steps that firms can consider.

What’s in the final rules?

The FCA’s policy statement follows on from two consultations (CP 25/17 and CP 25/26) and has been published just after a wider package of FCA reforms and government initiatives that aim to boost retail investment.

The new regime, expected to go live from 6 April 2026, has the potential to be transformational for the industry and for consumers who may not be able to access or afford advice today.

What’s changed since the consultation?

The FCA has proceeded with the rules largely as consulted on. However, it has made some adjustments, for example:

• Rather than providing ‘better outcomes’ under TS, firms will need to be comfortable that the consumer would be in a ‘better position’
• Clarifying its guidance on consumer segmentation
• Small adjustments regarding annuities – e.g. firms may target consumers towards whole of market annuity brokerages
• Simplified rules for ongoing monitoring
• Adjusted disclosure requirements

Firms are likely to find these amendments helpful as they tackle areas of ambiguity or practical difficulty that had been identified.

However, some changes the industry had called for such as allowing appointed representatives (ARs) to deliver TS, have not been implemented.

Scope of the final rules

Final rules and guidance for the TS framework will be inserted in the Handbook in COBS 9B.

These will be confirmed once the government has made amendments to the Regulated Activities Order (RAO) to establish TS as a new service.

Any firm seeking to provide TS will need to seek permission from the FCA via submitting a Variation of Permission (VoP) or a new firm application.

The FCA will open its authorisations gateway from March 2026 and several firms have already used its pre-application support service (PASS). Where firms submit credible and robust applications, the FCA is aiming to grant permission to provide TS at or soon after the commencement date of the regime (6 April 2026).

Wider context

The targeted support regime is part of a wider, significant package of regulatory initiatives:

• Final rules for Consumer Composite Investments (CCIs), replacing the UK PRIIPs and UCITS disclosure regimes
• An FCA consultation on changes to the client categorisation regime
• An FCA discussion paper on expanding consumer access to investments
• An industry review of how consumer-facing risk warnings should be displayed
• An FCA/FOS joint statement on how both regulators will work together on TS
• An FCA/ICO joint statement on how firms can engage consumers on TS
• An FCA consultation paper on adapting requirements for a changing pensions market

In addition, a further FCA consultation on simplified advice will follow in early 2026.

KPMG in the UK market insights on targeted support

• Banks, building societies and platforms are likely to be able to make the most use of the regime.
• Fund managers without a direct retail channel or high net worth-focused advisers may find it fits less well with their business model or capabilities. Notably, targeted support will likely only work for firms that have some form of direct-to-consumer relationship.
• The scale of the challenge to implement targeted support cannot be underestimated. Firms need to consider how targeted support can complement their existing propositions, before working through the final requirements in detail, building journeys, and pulling together a plan for FCA authorisation.
• The most significant challenges relate to:
  • capturing the right amount of data
  • calibrating the consumer segment appropriately
  • mapping existing rules (including the Duty) and accommodating them in the customer journey.
• TS will be much easier to provide to existing customers compared with new customers (due to the larger amount of data held). 

Where firms already had TS implementation programmes in flight, they will need to revisit their approach with reference to the near-final rules and guidance. Some of the key areas include:

Consumer segmentation

Despite industry feedback that the FCA’s position on ‘sufficiently granular’ segments was too ambiguous, the FCA has proceeded with the ‘sufficiently granular’ wording in its final rules.

However, it has introduced a new requirement that firms must not design segments that could be perceived as providing a comprehensive consideration of an individual’s circumstances or characteristics. In parallel, it has removed guidance that segments should not be overly individualised, and that common characteristics should not be overly complex.

Use of appropriate data is likely to be key for successful segmentation. Firms can consider:

1. Core customer information (e.g. age/demographic profiles)
2. Financial position indicators (e.g. salary/income data)
3. Behavioural and contextual insights (e.g. life event indicators or spending pattern changes)

The FCA will publish further information on segmentation before the rules go live.

Outcomes monitoring

Firms will continue to be responsible for monitoring outcomes delivered under TS.

The FCA has helpfully clarified that the TS framework does not require firms to monitor individual customer outcomes under TS or monitor market performance of products.

Pension consolidation

The final rules still prevent firms from giving a suggestion to consolidate pensions, but the FCA has added guidance about what does and doesn’t constitute consolidation.

Using assumptions

The FCA has maintained its position that firms can make reasonable assumptions when it comes to specifying ready-made suggestions for a consumer segment.

It has now added guidance that assumptions can be used to limit the number of common characteristics that are used to define a segment, but it has also stated that firms must not make assumptions that would be ‘material’ to the suggestions.

Ready-made suggestions

The FCA has maintained its position that firms can only suggest an annuity as an access method and suggest annuity features – i.e. firms will not be able to able to suggest particular annuity products or provide quotes.

In a change to the consulted approach, firms will now be able to direct consumers to whole of market annuity brokerages (whilst not providing a direct referral within the TS interaction).

Communications and disclosures

Overall, the FCA has maintained its approach but has made some minor changes. For example, it will require firms to explicitly call the service ‘Targeted Support’ in the communication which contains the ready-made suggestion, and has clarified its ‘durable medium’ requirements.

While targeted support offers significant opportunities, it also introduces new risks and operational challenges. Some of the key risks include the following:

1. Data: Firms are expected to make assumptions or gather sufficient data to inform TS suggestions. However, they will need to understand relevant data held on customers and decide which data is relevant or not for segmenting consumers.
   
   
2. The ‘better position’ test: The highly subjective nature of the test and what ‘better’ means in practice will require careful judgement. Bold approaches could risk delivering the wrong product to customers.
   
   
3. Pre-defining consumer segments: A key challenge for firms will be determining the appropriate level of granularity at which to define the consumer segment.
   
   
4. Conflicts of interest: There is a risk that firms’ selection of products under TS could be biased, potentially leaning towards suggesting products from their own range. This could be exacerbated if firms do not charge for TS.
   
   
5. The impact of digitalisation: The TS proposals are ‘channel-neutral’. Firms will need to be vigilant that TS solutions do not disadvantage vulnerable customers and consider how they will maintain adequate records where TS is delivered on the phone or face to face.
   
   
6. Double the boundaries to worry about: Firms will need to ensure that information and guidance does not stray into TS and that TS does not stray into advice.

We have significant experience in the impacted sectors and have specialists for designing/delivering advised and non-advised propositions.

We have also worked extensively on supporting firms implement and embed the Consumer Duty.

More specifically, we can assist with the following areas:

• Implementation support: Firms rely on our delivery specialists to translate TS requirements into workable operating models across technology, data and process. We help validate segments, test journeys and assist alignment with regulatory expectations ahead of authorisation or launch.
• Customer experience: We support firms to design targeted support journeys that are clear, intuitive and grounded in customer need. This supports intuitive TS journeys that are digitally enabled and aligned with Consumer Duty expectations.
• Product strategy: We help firms define propositions that balance regulatory expectations, customer needs and long-term commercial sustainability. Our capabilities assess customer impact, cost-to-serve and financial outcomes to inform proposition viability.
• Outcomes monitoring: We can help design outcomes monitoring frameworks – bringing together relevant MI points in order to determine whether better outcomes are being provided under targeted support.
• Data capture and management: Our teams work with firms to establish the data foundations that make TS segmentation and monitoring genuinely effective. This includes establishing data frameworks, strengthening reporting capabilities, and leveraging automation and AI to enhance efficiency and scalability.
• KPMG Law in the UK¹ and authorisation support: We advise firms on regulatory perimeter questions and the authorisation steps associated with TS propositions. We also support with third-party arrangements, helping firms navigate the regime confidently from application through to launch.
• Post-implementation reviews: Our specialists conduct structured reviews to assess how well TS has embedded and where refinement would strengthen compliance. We evaluate control design, highlight opportunities for improvement and share leading practice from across the sector.

Firms preparing for targeted support need approaches that are commercially viable, operationally efficient and ready to evidence outcomes from day one. KPMG in the UK brings well-established experience across Consumer Duty, conduct transformation and digital proposition build to help firms move quickly and confidently.

We combine regulatory insight, customer-centric design and data-driven delivery to accelerate implementation, reduce cost and risk, and support a controlled path to authorisation and launch.