The Financial Conduct Authority (FCA)’s Targeted Support regime is now live, with the authorisation gateway open for firms seeking permission to provide the new service, and the rules having come into force on 6 April 2026. With implementation underway, the focus has shifted from policy development to practical delivery. Drawing on our early engagement with firms across the sector, we are beginning to see how approaches to operational design, risk management, governance and implementation are taking shape in practice.
Targeted Support has the potential to play an important role in addressing parts of the advice gap, particularly for investors underserved by traditional advice models. However, delivering the regime successfully will require more than simply meeting regulatory requirements. Firms will need to design clear customer propositions, robust segmentation approaches, and operating models that are scalable, well-governed, and capable of evidencing good consumer outcomes.
PASS and early engagement with the regulator
Alongside the authorisation gateway, the FCA continues to encourage firms to engage through its Pre-Application Support Service (PASS).
PASS enables firms to discuss their proposed models directly with FCA authorisation teams and policy specialists before submitting a formal application. Through this engagement, firms can obtain early feedback on their Targeted Support propositions and refine their approach before entering the formal authorisation process.
The FCA has indicated that applications will be assessed through the existing authorisation and Variation of Permission framework, meaning firms will need to demonstrate that they are willing, organised and ready to deliver the new regulated activity. Firms engaging through PASS are expected to arrive with well-developed proposals, enabling constructive discussions around how their Targeted Support service will operate in practice.
This early engagement signals that the regulator expects Targeted Support to be treated as a distinct, carefully designed service model, rather than simply an extension of existing products or distribution approaches.
Customer journeys and segmentation at the centre
One of the clearest themes emerging from early discussions is the importance of customer journey design. Firms seeking authorisation are expected to demonstrate how consumers move through their Targeted Support journey, including:
- The products that will be offered through Targeted Support
- How customers who may benefit from the service are identified
- How consumers are grouped into segments with common characteristics and how alignment with those segments is assessed
- The questions asked during the journey and how customers are matched to ready-made solutions
- How the service will be communicated to customers, including the treatment of vulnerable consumers
- How journeys will be tested, monitored and supported through appropriate systems, training and controls
Unlike full advice, the regime does not require individualised suitability assessments. However, firms will still need to demonstrate that their segmentation is sufficiently granular to support appropriate suggestions for groups of consumers with similar characteristics. This places significant weight on the design, documentation and governance of segmentation models.
The FCA has also clarified, in PS25/22: Supporting consumers’ pensions and investment decisions – rules for Targeted Support, that the service aims to place consumers in a “better position”, rather than to guarantee specific outcomes. This reflects the point-in-time nature of the service and distinguishes it from personalised advice.
In practice, many Targeted Support journeys are likely to follow a limited number of predefined paths, directing consumers towards particular solutions depending on their characteristics. While this supports scalability, it increases reliance on robust segmentation and clear communications. Where these are poorly defined, there is a heightened risk of consumer misunderstanding or the activity being retrospectively interpreted as advice.
The FCA has now published a series of case studies to support firms in designing consumer segments for Targeted Support, providing practical examples across areas such as defining common characteristics, using customer data, and applying reasonable assumptions. These materials are intended to support firms in making practical judgements as they move from design into delivery.
Outcomes monitoring under Consumer Duty
Although Targeted Support does not involve ongoing suitability, firms will still need to monitor the outcomes generated by the service.
The FCA has been clear that this should be viewed as an extension of existing obligations under Consumer Duty and product governance frameworks, noting in PS25/22 that the COBS 9B.10 rules formalise and clarify expectations already placed on firms.
Firms will need to assess whether Targeted Support suggestions are delivering appropriate outcomes for the consumer segments they were designed for, and whether changes in products or market conditions may affect that assessment over time.
This presents a practical challenge. Traditional outcomes testing approaches are often manual and resource-intensive, making it difficult to monitor outcomes across large customer populations and multiple journeys.
As Targeted Support services scale, firms are likely to require more data-driven approaches to outcomes monitoring, enabling them to test journeys, identify potential consumer harm and demonstrate that segmentation and suggestions remain appropriate.
How can Square 4 help?
Square 4 supports firms through the end‑to‑end development of their Targeted Support service model, helping to translate regulatory expectations into clear, compliant and scalable propositions. Our advisory team brings deep experience across the advice-guidance boundary and Consumer Duty, supporting firms with customer-journey design, segmentation frameworks, governance, and operating models that are practical, proportionate, and regulator‑ready.
Alongside this, firms can leverage structured, technology-enabled approaches to monitoring and assurance. Tools such as Assure 4 combine regulatory expertise with AI-powered analytics to help firms:
- Validate that segmentation and ready-made suggestions remain suitable across consumer groups
- Test and monitor customer journeys at scale
- Identify emerging gaps, risks or potential consumer harm
- Evidence compliance with Consumer Duty and product governance requirements
Together, this approach enables firms to manage operational complexity more efficiently, maintain confidence in their service models, and generate actionable insight that supports better consumer outcomes at scale.
If you would like to discuss how we can support your business further, please get in touch:
Simon Goryl – Advisory Director (Wealth): sgoryl@square4.com
Luke Wootton – Client Relationship Director (Wealth) lwootton@square4.com.
Alice Buckley – Consultant (Wealth) abuckley@square4.com
