Alistair Shipp, Executive Director, Wealth Management and Private Banking at financial services & technology consultancy Capco, comments on the FCA’s consultation for its targeted support proposals which closed on Friday 29th August.
“With the FCA’s consultation on targeted support closing today, it’s encouraging to see continued regulatory action to address the UK’s advice and investment gaps.
“Targeted support, together with the Advice Guidance Boundary Review, goes some way in bridging these gaps by creating more opportunities for consumers to invest and providing greater clarity around advice. If firms act proactively to deliver their consumer segmentation models and scenario-based solutions, the initiative could be particularly beneficial – helping consumers take timely, appropriate action, reducing harm and supporting better outcomes.
“However, this should not be viewed as the sole solution to closing the advice and investment gaps. Many consumers have complex needs, so reducing the cost of simplified and full advice remains crucial to make it more accessible for those with less straightforward requirements. The broader regulatory framework – including Consumer Duty, MiFID suitability rules, and the Financial Services and Markets Act Regulated Activities Order – must also be reviewed to ensure it encourages firms to improve consumer knowledge, clarify investment options, and support wider participation, while maintaining robust consumer protection.
Next steps for financial services firms
“As it stands, it’s unlikely to be obligatory for established firms to build these new services alongside their existing offerings, so the first consideration will be whether to participate at all.
“The cost and complexity of the proposals will be a key concern for firms when deciding, with the onus on firms to determine when targeted support is relevant, pre-define consumer segments and associated solutions, and ensure these solutions are suitable under Consumer Duty.
“With this in mind, firms who are considering implementing targeted support services into their offering should start evaluating the business case and commercial viability now. This includes reviewing existing systems and processes in light of the proposals to determine those that could be adapted and identifying any additional work needed to design segmentation models, scenarios, and customer journeys.
“Alongside this, firms should also look to analyse their customer base to gauge the scale of opportunity, and reviewing risk appetite, policies, procedures, and prudential requirements to understand what changes might be necessary for successful implementation.”
