Firms will be able to suggest annuities as an access method as part of targeted support plans which are due to come into force from April 2026.
The Financial Conduct Authority (FCA) said targeted support will allow firms to make specific suggestions to consumers — so they can make better informed decisions about what to do with their money.
For the most part, the regulator has kept plans unchanged from those that were announced in June.
However, one of the key changes it has made since then is its positioning on how a firm can talk to someone about annuities.
Over the summer, the regulator proposed firms could not use targeted support to recommend a particular annuity to a consumer.
It had said the group‑based nature of targeted support would be inappropriate for recommending an irreversible lifetime product, which is necessarily personalised.
The initial proposals prohibited providing an annuity quotation as part of a ready‑made suggestion.
The FCA said it received mixed feedback on this and “engaged extensively” with stakeholders during the consultation period to examine the dynamics in the non‑advised annuity market.
In a policy statement, published today (December 11), the FCA said: “We consider that the degree of personalisation needed to recommend a particular annuity is inconsistent with a model based on groups of consumers sharing common characteristics.
“Similarly, as annuity quotations are based on particular products, providing such quotations (including if based on an average rate for illustrative purposes) as part of a targeted support journey would give the impression that a firm was recommending a particular annuity.
“At the same time, we recognise that annuities can have an important role to play in retirement. We are maintaining that firms can only suggest an annuity as an access method and suggest annuity features.”
The FCA said firms will not be able to suggest a particular annuity product or provide a quotation.
It will also continue to require firms to direct consumers to the MoneyHelper annuity comparison tool within the ready‑made suggestion.
However, firms will be able to direct consumers to whole of market annuity brokerages but must not provide a direct referral within the targeted support interaction.
“Instead of providing a direct referral, firms may inform the consumer that they will subsequently provide them with information on a relevant annuity brokerage once the targeted support journey has ended.”
What has changed since the last update
Other tweaks the FCA has made include amending the terminology of its purpose statement from ‘better outcomes’ to ‘better position’ to avoid potential confusion with ‘good outcomes’, which firms must act to deliver under the consumer duty.
It has also amended rules and guidance on consumer segments, to require that firms do not use a level of detail that, broadly, “a firm that provides investment advice would associate with a comprehensive consideration of a consumer’s characteristics or circumstances”.
Sarah Pritchard, deputy chief executive of the FCA, said: “Targeted support is a radical shift. It is important that consumers understand what it is, and what it is not.
“While the recommendations firms make will be personal to the consumer, they will not involve a comprehensive consideration of that consumer’s characteristics or circumstances.
Targeted support will be game changing. It means millions of people can get extra help to make better financial decisions.
“Firms will be responsible for designing good products and services and will be required to comply with the consumer duty. But consumers will be responsible for making their own decisions.”
Under the service, it is also simplifying rules and guidance on firms’ obligations for ongoing monitoring of the targeted support service, recognising the one‑off nature of targeted support.
The FCA has also added new requirements which will require firms to keep a record of how they meet their disclosure obligations.
It has also amended guidance for advised consumers by clarifying that the expectation for firms to consider the information needs of advised consumers applies only where the firm is reasonably aware that the consumer is receiving or has recently received relevant investment advice from an adviser.
The FCA said it will amend rules on charging, to remove the proposed requirement for firms to ensure that consumers understand the basis on which firms are remunerated.
The FCA is maintaining its position that firms can decide whether to charge consumers for targeted support.
“As such, we are narrowing the scope of our rule so that firms can accept payments, which are reasonably representative of the costs of providing the service, from affiliated companies (as opposed to associates, which is a broader term),” it said.
“This change is intended to ensure that only payments from undertakings in the same group as the targeted support provider are captured. We recognise that cross‑subsidisation may benefit larger, vertically integrated firms.
“However, cross‑subsidisation enables firms to offer the service for free at the point of use. We think this will help make sure that targeted support is available to a large number of consumers.”
What can people expect with targeted support?
Targeted support is a form of entry-level advice, which will require a new permission but will be positioned alongside simplified advice and full advice. The FCA is also working on a better framework for simplified advice, which it said it expects to appeal to smaller advice firms.
Less than one in 10 people obtain regulated financial advice however, nearly one in five turn to family, friends or social media for help making decisions.
Pritchard said: “Targeted support will be game changing. It means millions of people can get extra help to make better financial decisions.
“We also hope it will build greater confidence to invest. While investing will not be right for everyone, we know people in the UK invest less compared to the EU or US. People in the UK could be missing out on the potential benefits of investing in the medium to long term.”
It plans to open the gateway for applications in March 2026, before the new rules come into effect on April 6, 2026, subject to government approval.
New legislation will have to be passed by the government before targeted support goes live.
sonia.rach@ft.com
