Wealth manager trade body PIMFA has called for clarity in key areas over the FCA’s Targeted Support proposals to ensure the regime delivers on its aims and avoids consumer confusion.

In its response to the consultation, the organisation said it strongly supports the FCA’s proposals.

Simon Harrington, head of public affairs at PIMFA, said: “Targeted support has the potential to be one of the most important reforms in a generation. There is a clear support gap which currently exists in the UK with 25 million people never having received professional advice or guidance.

“Targeted support can go some way to bridging that gap. While we believe that this gap manifests itself across retail investment and pensions, because of the nature in which consumers tend to engage with their personal finances, we still believe that it will be most impactful for consumers making retirement decisions.”

 He said to make it work for consumers and firms, the proposals would benefit from more clarity in key areas, specifically around data collection, and the way in which suggestions are communicated to consumers.

He said the distinction between targeted support and regulated advice must be made crystal clear so that consumers understand that suggestions are options, not instructions. Mr Harrington said: “Ultimately, targeted support should be used to help consumers understand what they could do in certain situations, rather than tell them what they should.

“Where consumers do want more assertive direction, we believe that simplified advice remains an option the FCA should consider. Provided that it is accompanied with clear rules, focuses on servicing specific transactions and, crucially, is accompanied with a review of the qualification requirements, simplified advice can play a role in helping firms provide much needed certainty to consumers with clear needs at a cost which is affordable to them and to the firm.”

Other points raised by PIMFA as part of their consultation response included consumer segmentation, better outcomes principle, scope restrictions, annuities, consumer protections, appointed representatives and implementation.

The regulator’s consultation into its new proposals closes today and has been widely welcomed by adviser firms.