Partner Michelle Quinn has provided comment in Law360 on the steps that must be taken to ensure that the FCA’s new targeted support regime is effectively implemented.

Michelle’s comments were published in Law360, 14 July 2025.

Commenting on whether direct marketing rules will deter firms from offering the service, Michelle said: “There is significant tension between what the FCA is suggesting firms could do in the context of the TSR and what those same firms are prohibited from doing under the direct marketing rules.

“With many calling for changes to direct marketing rules and the pensions and retail investment sectors pushing for legal reform, there’s a real risk that, even if the TSR launches on time, firms may hesitate to act without legislative change or clear guidance.

“Ultimately, if firms don’t feel confident offering targeted support, the whole regime risks falling flat, as few will take the chance of breaching marketing rules.”

Michelle further outlined whether there is still confusion between better regulation required for targeted support and good regulation under the Consumer Duty, stating: “One potential issue with the TSR is that it will sit uncomfortably with the Consumer Duty if it is to be workable for firms in practice. Financial services and investment products can be difficult to understand at the best of times and it is likely that many of those looking at the TSR may be relatively inexperienced with investments.

“Having any confusing language at all could end up making the provision of targeted support that much more difficult for firms.”

Noting additional challenges the regime faces, she said: “There are other operational challenges with the TSR, including sorting consumers into segments. If firms are required to undertake too much due diligence and fact finding in order to segment consumers then this will undermine the regime.

“Such challenges could lead to reduced uptake by firms, as providing targeted support is voluntary, or they may lead to complaints to FOS and it will become overly burdensome and not cost-effective to deliver.

“The boundary between advice and support is a grey area and one the FCA acknowledges. For instance, language used in TSR communications can be difficult to understand, with phrases such as ‘you should consider’ or ‘you would benefit from’ being likely construed as advice rather than support.

“Instead, communications need to be carefully drafted to ensure it is clear that what is being provided are ‘pre-made suggestions’ to a consumer group based on certain characteristics.

“There is a very real risk that vulnerable consumers will be excluded from segments. Firms will have to perform a careful balancing act when applying certain characteristics to segment consumers while complying with the Consumer Duty.”

Michelle also provided her thoughts on the issues surrounding conflicts of interest, commenting: “Promoting your own products always risks a conflict and whilst transparency and suitability are non-negotiables, firms will still face challenges. As such, segmenting must be precise to avoid mis-selling, but not so detailed it slips into personalised advice. It is a delicate balance but one firms must get right.

“On balance, it would seem sensible to exclude ARs from providing targeted support, at least to start, as they may not have all the capabilities necessary to implement the regime, such as pre-defining consumer segments with sufficient granularity, having systems in place to conduct consumer segmentation properly and testing and monitoring outcomes.

“For the time being, while there is still uncertainty and potential operating issues, it is more sensible to restrict those who can offer targeted support.”

She also discussed the effects of pension rule changes on the regime, stating: “The pension rule changes may impact take-up of targeted support, as some may feel they no longer need the additional aid. More positively however, people will be able to see their pension pot(s) in one place, therefore increasing the likelihood of their engagement.”