The FCA’s targeted support regime (PS25/22) is intended to close the advice gap by allowing firms to provide ready-made suggestions to consumer segments with shared needs or characteristics, without triggering the full cost and friction associated with individualised advice.
The policy objective is clear. The operational reality is more subtle. Targeted support reduces ex ante prescription, but it does not remove outcomes-based scrutiny. In particular, the FCA has been explicit that both Principle 9 (suitability) and Principle 12 (Consumer Duty) continue to apply.
This briefing focuses on what that means in practice, why hindsight reconstruction risk becomes the dominant exposure, and how firms can make predictable, defensible use of the regime.
1. What PS25/22 changes (and what it does not)
PS25/22 introduces a new framework for targeted support in pensions and investments. The regime is designed to sit between generic information/guidance and full regulated advice. It allows firms to:
- define consumer segments with shared needs, objectives or characteristics;
- provide ready-made suggestions intended to be appropriate for those segments;
- do so without conducting a full individualised suitability assessment in the COBS 9/9A sense.
The key point is that targeted support is not a “safe harbour”. The detailed COBS suitability machinery may not apply in full, but the core normative standards—suitability and good outcomes—remain in play via Principles 9 and 12.
2. The structural tension: “better position” vs “good outcomes”
The FCA frames the objective of targeted support as placing consumers in a better position, rather than guaranteeing an outcome. This helps differentiate targeted support from advice and avoids implying a promise of performance.
However, the Consumer Duty’s organising concept is good outcomes, including preventing foreseeable harm, supporting consumer understanding and ensuring fair value. Once harm crystallises—particularly in volatile markets—reviewers will naturally gravitate towards outcomes-based reasoning.
In practice, firms should assume that the “better position” framing will not, on its own, constrain hindsight evaluation. The defensibility of design choices will matter more than labels.
3. Why hindsight reconstruction becomes the dominant risk
Targeted support reduces front-end prescription. The trade-off is that firms must be able to reconstruct, defend and evidence their judgement later. In complaints, supervision or enforcement, the questions tend to be concrete:
- Why was the consumer placed in this segment?
- What risks were identified as foreseeable at the design stage—and how were they mitigated?
- What assumptions were made about consumer understanding and behaviour?
- Why was the ready-made suggestion reasonable given what was known at the time?
This is the critical mindset shift: targeted support is less about satisfying a prescribed process and more about demonstrating that the firm operated a governed decision-making system.
4. Segment design is a regulated judgement, not a marketing exercise
PS25/22 expressly warns against segmentation becoming so granular that it replicates advice-level personalisation. This warning is important, because commercial incentives push towards more tailoring: more questions, more nuance, higher conversion.
The risk is “segment drift”: targeted support journeys slowly become advice-like in substance. That creates two problems:
- Boundary fragility: if the journey looks and feels like individualised advice, it becomes harder to rely on the segment-based framing when challenged.
- Expectation inflation: the more personalised the journey appears, the more likely reviewers are to import advice-like expectations under suitability and the Duty.
Firms need a disciplined approach to segment definition, including documented inclusion/exclusion criteria, explicit assumptions, and a clear rationale for the trade-offs being made.
5. Communications and behavioural design will be scrutinised
Under targeted support, a technically accurate disclosure is rarely a complete defence. The Consumer Duty raises the bar from “clear and not misleading” to “supports understanding in practice”.
Firms should expect scrutiny of design choices such as:
- salience and sequencing of risk information;
- defaults, nudges and friction;
- how downside scenarios are presented relative to headline benefits;
- how the firm tests whether consumers actually understood key risks.
In short: outcomes-based regulation tends to become behavioural regulation in practice.
6. Making the regime predictable: a practical operating model
Firms can use targeted support safely and at scale, but it requires disciplined governance. The starting point is to treat targeted support as a system that must be defensible under retrospective review.
Six design and governance disciplines
- Define segments as regulatory artefacts
- Document trade-offs explicitly
- Foreseeable harm registers for each segment
- Evidence “support for understanding”
- Change management and monitoring
- Complaints defensibility pack
The objective is to make targeted support predictable: not by eliminating judgement, but by making judgement transparent, governed and evidenced.
Conclusion
Targeted support can expand access and reduce friction. But firms should be under no illusion: the continued application of Principle 9 and the Consumer Duty means the regime does not remove suitability and outcomes thinking—it relocates it into governance quality and hindsight defensibility.
Firms that treat targeted support as “advice-lite” will find that complexity is not removed, only deferred. Firms that treat it as a governed decision-making system can use it with confidence.