FCA aims to finalise new advice rules by end of 2025

The Financial Conduct Authority (FCA) says it aims to finalise its new rules on targeted support and simplified advice by the end of 2025, according to Which?, which reported the position on 5 October 2025¹. Targeted support would allow firms to make suggestions to groups of consumers with similar characteristics, for example those not saving enough for retirement¹. A launch date of March 2026 is scheduled¹.

The rules sit alongside the FCA's retirement income market data for 2024-25, which showed that of the 962,000 pension plans accessed for the first time in 2024-25, only 31% were taken after receiving regulated advice¹. Around 350,000 new pension drawdown plans were taken out in 2024-25, and only 45% of schemes were set up after receiving advice, compared with 66% of drawdown policies in 2018-19¹. The proportion of customers taking advice has fallen for six years in a row, and nearly six in 10 pensions accessed are taken without any professional advice or guidance at all¹.

The FCA's 2024 Financial Lives survey found that 75% of over-45s do not have a clear plan for how to take money from their pension, or did not realise they had to make a choice¹. The FCA puts the average initial charge of advice at 2.4% of the amount invested, with ongoing fees of around 0.8%¹. In 2024-25, just under 11% of pensions were accessed after a Pension Wise appointment, around 103,500 pots in total¹.

Under the proposals, firms will be allowed to offer targeted support for free, but can charge for it if they wish¹. There is currently a consultation on targeted support, and the FCA is seeking to clarify proposed rules on charging and commission¹. Simplified advice would be individualised advice focused on a single, straightforward consumer need, without requiring a full assessment of circumstances and delivered at a relatively low cost¹.

Why it matters for households

The figures cover people accessing pension pots, particularly those choosing drawdown, where withdrawals, investment risk and the risk of running out of money have to be managed¹. All retirement income, whether from drawdown, annuity payments, money from defined benefit plans or fully cashed-in pensions, is subject to income tax, with the exception of the initial tax-free lump sum of up to 25% of a pot¹. Total tax-free cash is capped at £268,275 for most people¹.

If the rules are finalised as planned, firms would be able to make suggestions to groups of consumers with similar characteristics from March 2026¹. Whether a firm charges for that support would be a matter for the firm, under the proposals¹. The advice gap is the term used for the shortfall in people taking regulated advice¹.

What happens next

The FCA aims to finalise the rules by the end of 2025¹. A consultation on targeted support is open, covering proposed rules on charging and commission¹. Targeted support has a scheduled launch date of March 2026¹.