12 February 2025
If you are covering the FCA consultation (CP24/27) closing tomorrow (13th Feb) on the ‘Advice Guidance Boundary Review – proposed targeted support reforms for pensions’, please find comments below from Steven Levin, CEO, Quilter:
“The FCA’s initiative to introduce targeted support marks a crucial step towards closing the advice gap. There is an obvious need to provide further support to the millions of auto-enrolled pension savers who are largely unengaged. According to DWP analysis, 12.5 million of the working-age population are under-saving for retirement. The FCA’s retirement income market data also shows that more than 145,000 DC pension plans over £30,000 were withdrawn at likely unsustainable rates of 8% and above.
“Millions of people struggle to access financial advice due to perceived affordability constraints or lack of awareness, yet they need more help to make better financial decisions. This framework allows firms to offer structured support without crossing into full regulated advice, potentially helping larger numbers of consumers navigate their investment and pension choices with greater confidence.
“To ensure its success, targeted support must be flexible and responsive to consumer needs. Firms should have the ability to define scenarios, consumer segments, and ready-made solutions at a firm level, allowing them to tailor support in a way that works for their clients. While regulatory guidance is important, overly prescriptive rules risk stifling innovation and making the framework too rigid to adapt to real-world consumer challenges. The ability to test and refine targeted support approaches in collaboration with the FCA and FOS will be key to ensuring they remain effective over time.
“Consumer protection must be at the heart of this framework. Targeted support should only be provided by firms with the appropriate regulatory authorisation, ensuring high standards of conduct and preventing bad actors from exploiting the system.
“Financial advisers should also play a role in delivering targeted support, provided they have the scale and resources to help consumers make informed financial choices. However, it is important to distinguish between targeted support and holistic financial advice. Those already receiving ongoing financial advice should have a holistic plan and thus not need targeted support. The new framework should focus on helping those who would otherwise struggle to access support.
“Affordability is a key challenge, and firms must have the flexibility to establish their own charging structures. If upfront fees are mandated, many of the people who stand to benefit most from targeted support may be discouraged from using it altogether. Ensuring that the framework is commercially viable for firms while remaining accessible for consumers will be critical to its success.
“Ultimately, targeted support will be most effective when combined with other initiatives, such as simplified advice and holistic advice, creating a full spectrum of support for consumers. No single solution will close the advice gap entirely, but this initiative represents a positive step forward in ensuring that more people have access to the support they need at different stages of their financial journey.”
