Category: AI Regulation | Reading time: 9 minutes

The FCA published PS25/22, Supporting consumers' pensions and investment decisions: rules for targeted support, on 11 December 2025, containing near-final rules.¹ The rules could not be made final until the Government passed the legislation creating the new regulated activity.

The FCA Board confirmed the near-final rules as final on 26 February 2026, with only minor changes, largely to cross-refer to the legislation the Government had brought forward.¹

The Handbook instrument giving effect to them is the Advice Guidance Boundary Review (Targeted Support) Instrument 2026, FCA 2026/5 and FOS 2026/04. It was made by order of the FCA Board on 26 February 2026 and by the Financial Ombudsman Service Limited on 23 February 2026.²

It has four commencement dates, which is worth knowing if you are tracking when things bite. Parts of Annex A and the whole of Annex D came into force on 2 March 2026, to enable the FCA to levy fees on applications for permission. Part 2 of Annex M comes into force on 31 December 2026. Part 2 of Annex G comes into force on 6 April 2027. Everything else came into force on 6 April 2026.²

Targeted support is a new regulated activity, specified in article 55A of the Regulated Activities Order.² It allows an authorised firm to provide suggestions designed for groups of consumers with common characteristics.³ It applies to pensions and retail investments. A firm must apply to vary its permission before providing it, and the FCA opened its authorisations gateway in March 2026, with a pre-application support service available through Connect.³

The instrument itself gives a sense of the scale. It runs to 122 pages and amends sixteen Handbook modules: the Glossary, SYSC, TC, FEES, MIFIDPRU, IPRU-INV, COBS, ICOBS, FPCOB, PDCOB, PROD, SUP, DISP, COLL, CREDS and FUND, plus PERG outside the Handbook.² It also inserts an entirely new chapter, COBS 9B, which is where the operative rules sit.

Most regulatory change adds an obligation. A new rule appears, firms map it to a control, and the control tests for compliance with the rule.

Targeted support does the opposite. It creates a space in which a firm may do something it previously could not, provided it holds the right permission. From a control design point of view that is harder to absorb, because there is nothing to test for. What has changed is not what a firm must do but what an interaction can legitimately be.

The advice boundary used to have two positions. On one side, information and guidance. On the other, personal advice. Every control, every training module and every file review template built in UK retail financial services over the last decade encodes that binary somewhere.

There are now three positions: information and guidance, then targeted support, then advice.

Three failure modes, and they are all silent.

The false positive. A control that flags language suggesting a course of action to a specific group of customers will flag compliant targeted support from a permitted firm. The control is not wrong about what it saw. It is wrong that what it saw is a problem. Nobody notices immediately, because a flag raised is not a failure. It is a queue item. What happens is that reviewers start overriding the control, and a control that is routinely overridden stops being a control.

The record that cannot be made. File review templates and communication logs that ask whether an interaction was advice or information have no third option. If a firm provides targeted support, the record either misdescribes it or leaves the field blank. Both are worse than no field, because the record now says something untrue about a regulated activity.

The client categorisation assumption. COBS 9B.3.4R requires a firm to treat a client receiving targeted support as a retail client, even where that client would otherwise be categorised as a professional client or an eligible counterparty.² Any control that varies its treatment by client category needs to know that this service overrides it.

The training that teaches a missing third. Anyone taught the boundary as a binary will apply it as a binary. That produces two errors in opposite directions: staff who avoid legitimate targeted support because it looks like advice, and staff who treat targeted support as guidance and skip the requirements attached to it.

I have a first-person example of the first failure mode. Two of the compliance tools I published in early 2026 were built on the binary boundary. One was designed to check whether a client-facing message crossed into personal advice, and its logic had no category for a suggestion legitimately made to a defined consumer segment by a permitted firm. It would have marked compliant targeted support as a potential breach. The other was a record-keeping prompt that asked users to classify an interaction as advice or information, and it could not record a targeted support interaction at all.

Neither tool was wrong when it was written. Both became wrong on 6 April, and neither announced it.

Five limits worth knowing, all from COBS 9B itself.

Safeguarded benefits are out. A firm must not provide targeted support in relation to safeguarded benefits.²

Pension consolidation is out. A ready-made suggestion must not include an express or implied recommendation to consolidate any of the pension arrangements a client holds. The FCA's reasoning is that consolidation would require a more individualised assessment than targeted support permits. A firm can still support a client who has multiple pots with a decision that does not rely on consolidating them.²

Annuities are heavily constrained. A firm may only recommend an annuity where the recommendation does not refer to a particular annuity, goes no further than the features of an annuity, is unaccompanied by any quote, and directs the client to the MoneyHelper comparison facility. The firm must then end the targeted support interaction and say that it has ended.²

Restricted investments are out. A ready-made suggestion must not recommend buying restricted mass market investments, non-mass market investments, investments subject to COBS 22 restrictions, or credit union deferred shares and subordinated debt.²

Appointed representatives cannot do it. Providing targeted support is not permitted business of appointed representatives.²

There is also a prudential consequence that has had almost no coverage. A firm with permission to provide targeted support has a permanent minimum capital requirement of £500,000 under MIFIDPRU, and equivalent £500,000 floors are inserted into IPRU-INV for investment management firms, personal investment firms and securities and futures firms.² For a smaller firm, that number may settle the question of whether to apply.

Four checks, roughly in order of how much damage they prevent.

Take one control and test it against the new category. Pick a file review checklist, a communications sign-off, or an automated flag. Walk a compliant targeted support interaction through it. If the control treats it as a breach, or has nowhere to record it, you have found the gap without needing an audit.

Look at your record-keeping fields before your rules. A rule that misfires produces a queue item someone reviews. A record field that cannot describe what happened produces a permanent inaccuracy in a file. The second is worse and takes less time to fix.

Check your training material's publication date. Anything on the advice boundary written before December 2025 describes a two-position boundary. That does not make it wrong about what advice is. It makes it incomplete about what the alternatives are.

Decide whether you are applying, before the question is asked. If your firm is not seeking the permission, that is a legitimate position and worth recording as a decision rather than leaving as an absence. If it is, the gateway has been open since March.

The instinct in compliance is that permissive rule changes are easier to absorb than restrictive ones. The opposite is usually true.

A restriction maps onto an existing test. You tighten a threshold, add a check, extend a review. A permission creates a category that your existing tests have no name for, and a control with no name for something does not fail loudly. It quietly misclassifies, and the misclassification looks like the control working.

The boundary is now information and guidance, then targeted support, then advice. The useful question is not whether your firm intends to use the new activity. It is whether anything in your control environment still believes there are only two options.

This article is general guidance, not legal advice. Whether a specific interaction falls within targeted support, and what permissions and controls your firm requires, is a question for your compliance function and legal counsel.