PIMFA has welcomed the “targeted support” proposals from the Financial Conduct Authority (FCA) but also called on the regulator for clarity in key areas.

The Trade association representing wealth managers and financial advisers said that more clarity would ensure the regime delivers on its aims and avoids consumer confusion

Currently, the FCA is consulting on a new regulatory proposition for targeted support in pensions and retail investments. This support would enable firms to provide suggestions designed for groups of consumers with common characteristics to help them make financial decisions.

PIMFA has suggested that targeted support has the potential to be “one of the most important reforms in a generation”, warning that there is a “clear support gap” in the UK with 25 million people never having received professional advice or guidance.

“Targeted support can go some way to bridging that gap,” head of public affairs at PIMFA, Simon Harrington, said. “Whilst 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.”

Harrington also said that while PIMFA strongly support the FCA’s ambition to close the UK’s support gap, the proposals would benefit from more clarity in key areas around data collection, and the way in which suggestions are communicated to consumers.

He added that the distinction between targeted support and regulated advice must be made “crystal clear”.

“Ultimately, targeted support should be used to help consumers understand what they could do in certain situations, rather than tell them what they should,” he continued. “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.”

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