Targeted support could be a major step forward in addressing the advice gap and engaging customers in a more meaningful way.

When we talk about targeted support, the real question is not what it means from a regulatory perspective; the more important question is what it could mean for consumer engagement, financial resilience and the way firms support customers in making better financial decisions.

At its heart, targeted support is the FCA's attempt to address a longstanding challenge within financial services. Too many consumers are left to navigate complex financial decisions without sufficient support, while firms have often been reluctant to engage proactively for fear of crossing the regulatory boundary into personal recommendations or regulated advice.

As a result, many consumers receive information but not necessarily support. They are given choices but little confidence to act. The consequence is an advice gap that has persisted for many years and continues to affect decisions around saving, investing, retirement planning and protection.

Targeted support seeks to bridge that gap.

The framework allows firms to provide suggestions and support to groups of consumers who share common needs or characteristics, without requiring the full fact-finding and suitability processes associated with regulated financial advice. In doing so, it creates an opportunity to engage more consumers with greater relevance and at a scale that has previously been difficult to achieve.

Perhaps the most important change is the shift from a reactive model of engagement to a proactive one.

Historically, consumers have largely been expected to recognise that they need help, seek it out themselves and, in many cases, pay for it. Yet many either fail to recognise the need for support or delay making decisions because they lack confidence.

Targeted support allows firms to identify groups of customers who may benefit from taking action and to engage them at the right moment. Rather than waiting for consumers, firms can take a more active role in helping people identify opportunities, risks and potential next steps.

Equally important is the opportunity to make engagement more relevant and accessible.

One limitation of generic guidance is that consumers often struggle to see how it applies to them. Information may fail to resonate because it feels distant or impersonal. Targeted support creates an opportunity to make communications more meaningful by focusing on groups with shared characteristics, behaviours or needs.

This has the potential to improve engagement, increase financial understanding and enable consumers to make more informed decisions. It may also help address one of the most persistent challenges facing the industry: consumer inertia.

Many individuals delay decisions about pensions, investments and long-term financial planning because of uncertainty. The fear of making the wrong decision can often be enough to prevent any decision at all. Targeted support has the potential to provide consumers with sufficient reassurance and direction to encourage action, while stopping short of delivering personalised advice. However, the success of the regime will depend on participants understanding their respective roles and responsibilities.

For consumers, the benefit is greater access to meaningful support. People who may never seek regulated advice could receive timely prompts and relevant suggestions that improve their financial resilience and long-term outcomes. But consumers must understand that targeted support is not personalised advice. It is intended to support better-informed decisions, but responsibility for those decisions ultimately remains with them.

For firms, targeted support is an opportunity to rethink customer engagement. Rather than viewing regulation solely as a constraint, firms can leverage data, behavioural insights and a deeper understanding of customer needs in order to deliver better outcomes. Those that do this effectively could strengthen trust, improve loyalty and differentiate themselves.

That opportunity, however, comes with responsibilities. Firms will need:

• Strong governance arrangements
• Clear consumer communications
• Effective monitoring and
• Robust Consumer Duty frameworks to demonstrate that the support they provide genuinely delivers good outcomes and does not simply become another distribution mechanism for products.

For advisers and intermediaries, meanwhile, targeted support is not necessarily a threat. Indeed, it may have the opposite effect. Consumers with relatively straightforward needs may receive sufficient support through targeted engagement, while those with more complex circumstances can be identified earlier and directed towards full regulated advice where appropriate.

Targeted support could become an important gateway into the advice market.

The opportunities also extend beyond financial services firms.

• For employers, particularly those offering workplace pensions and financial wellbeing initiatives, targeted support may provide a more effective way of helping employees engage with critical financial decisions. Many employers recognise the impact financial stress can have on wellbeing, productivity and workforce engagement, yet have been cautious about how much support they can provide. Increased regulatory clarity may allow them to play a clearer and more active role without fear of straying into regulated activity.
• For regulators, success will ultimately be measured by outcomes. The FCA's objective is clear: narrow the advice gap, improve participation in saving and investing, and ensure consumers receive support proportionate to their needs.

The regulator will expect firms to demonstrate that targeted support is being used responsibly, transparently and in a manner consistent with good consumer outcomes. But the opportunity is much bigger than compliance. It is a chance to transform consumer engagement from a regulatory obligation into something genuinely useful. Firms can engage earlier, communicate more effectively and help consumers navigate key financial decisions at the moments that matter most.

If implemented well, consumers gain access to meaningful support, firms build stronger and more trusted relationships, and advisers can focus their expertise where it is most needed. And the industry will move one step closer to addressing an advice gap that has remained unresolved for far too long.