The Society of Pension Professionals (SPP), the Association of British Insurers (ABI) and law firm Sackers have all welcomed the FCA’s proposals on targeted support but highlighted areas where the framework needs to be improved.
In its consultation response, the SPP said it supports the concept but raised concerns that restrictions in the current proposals could limit support available to consumers. It called for the term “better position” to be used instead of “better outcome,” warned that excluding pension pot consolidation could undermine policy objectives, and flagged barriers such as direct marketing rules. The body also urged the FCA to distinguish between existing authorised firms looking to add targeted support permissions and new firms seeking authorisation.
The ABI also emphasised the need for clarity and proportionality in the rules to give firms the confidence to offer targeted support at scale. It backed the FCA’s flexible approach but called for clearer guidance on customer segmentation, ongoing monitoring, and use of additional customer information. It also supported the inclusion of annuity brokerages in targeted support suggestions and said data protection and marketing rules will need to be updated to allow suggestions to be delivered electronically.
Sackers welcomed the proposals as a positive step for providers of contract-based schemes but warned that occupational pension scheme trustees are currently unlikely to be able to deliver targeted support directly. Partner Jacqui Reid urged the FCA to work with The Pensions Regulator and the DWP to broaden the framework so trustees can also provide support, aligning the regime with government reforms in the Pension Schemes Bill and efforts to improve retirement adequacy.
SPP Financial Services Regulation Committee chair Amanda Cooke says: “The SPP supports the concept of targeted support and is keen to ensure these proposals deliver for consumers. That’s why we’ve highlighted areas of concern, likely barriers to success and a range of suggested improvements.
“We look forward to continuing to work with the FCA in a spirit of collaboration to make targeted support the best it can be.”
ABI long-term savings policy manager George Ritchie says: “We support the FCA’s continued exploration of the financial advice and guidance landscape and the regulator’s focus on supporting more people with complex financial decisions. While no single solution will entirely close the advice gap, targeted support is a major leap forward.
“But to ensure that targeted support becomes the mass-market intervention envisaged by the FCA, changes are needed to tackle remaining regulatory uncertainty around ongoing monitoring of outcomes, treatment of additional customer information, and customer segmentation. Clarity is key to give firms the necessary confidence to start offering this novel form of support to customers.
“As we build up to the final policy statement expected in December, we’ll continue to work closely with FCA, HMT, FOS, MaPS and consumer groups to help shape final rules.”
Sackers partner Jacqui Reid says: “As the DC pensions landscape continues to evolve with more pensions savers fully reliant on their DC pot and state pension for their retirement income, pensions savers will need more effective support to help them build DC savings which will give them the retirement income they need. We know that many people are not able to pay for advice and that the current support options that providers and trustees can offer their pension members without straying into regulated advice are quite limited so often fall short of what members really need.
“We therefore welcome and support the work undertaken by the FCA in relation to targeted support as it seeks to expand the support provided to pension scheme members throughout their retirement journey. We think that the proposals as they stand provide a good basis for providers of contract-based workplace pension schemes to provide more effective support to their members. However, we would encourage the FCA to continue to work with TPR and the DWP to consider the scope of targeted support from the perspective of occupational pension scheme trustees.
“With targeted support positioned as a new regulated activity, as things stand, it is unlikely that trustees of master trusts and own trust occupational schemes will be able to deliver this directly, as we had hoped they would be able to do. So we encourage the FCA to work with the industry to find a way to enable trustees to be able to offer targeted support or its equivalent directly to all their members. If we can get this right, it will complement the initiatives in the government’s “game changer” Pensions Schemes Bill and strengthen the much-needed focus on developing measures to tackle the critical issue of adequacy in retirement.”