Firms mustn’t neglect customer vulnerability when looking to offer targeted support, MorganAsh warns

16 December 2025

Firms looking to offer the FCA’s new targeted support must not neglect the customer vulnerability requirements of Consumer Duty, MorganAsh warns as the regulator confirms the proposals will go ahead and take effect from April 2026.

On Thursday, the FCA set out the “near final rules” for the targeted support framework, with firms able to submit applications in March 2026, ahead of the provisional go-live date in April - which is subject to necessary legislative changes.

The move will enable firms to make recommendations to consumers in segments with particular characteristics, without a full, in-depth individual assessment. According to the FCA, the new service will support at least 18 million people over the next decade, increasing access to and providing extra help with investments and pensions.

With targeted support being underpinned by Consumer Duty, vulnerability specialist MorganAsh warns that firms must not overlook the requirements of the regulation – specifically, identifying vulnerable customers and understanding their characteristics and needs.

Clause 4.12 of FCA’s policy statement reads: “Firms should consider the expectations within FG21/1 to respond flexibly to the needs of vulnerable consumers. This may involve providing additional or specific signposts to vulnerable consumers which are within a targeted support journey.”

Andrew Gething, managing director of MorganAsh said:

“We welcome the introduction of targeted support to help the 90% of consumers who presently don’t get full advice. Targeted support will allow firms to make recommendations on segments of consumers with similar financial positions, providing a bridge between limited or generic guidance and full advice, and encouraging firms to offer an affordable and accessible alternative.

“Given that it is underpinned by Consumer Duty, firms will still need to comply with FG21/1 on vulnerability and identify and support those with vulnerable characteristics, whether that’s health, negative life events or low capability. According to the FCA’s Financial Lives Survey, this is nearly half of the population. Firms looking to offer this service need to know who their vulnerable customers are to determine if targeted support is even appropriate, never mind to meet the wider Duty requirements to identify, record, monitor and report on customer vulnerability and outcomes.”

The warning comes as the Chartered Insurance Institute (CII) and Personal Finance Society (PFS) launch new vulnerability management guidance, designed to overcome existing knowledge gaps and support firms in turning the principles-based guidance of Consumer Duty into practical action. The guidance sets a higher benchmark for IT systems, processes and data infrastructure to successfully manage customer vulnerability – a benchmark which has now become the de facto standard for the Financial Ombudsman Service (FOS).

“It quickly becomes clear that deploying digital vulnerability management is an absolute must for firms intending to provide targeted support,” Andrew continues. “Not only is this approach in line with the new guidance, it brings consistency and accuracy, ensures robust data and delivers real efficiencies - which is key in making sure targeted support is viable and low cost, while still scalable. Fortunately, digital systems already exist in the market to manage this entire process and deliver the intelligence and efficiencies required.”

MorganAsh is a specialist in Consumer Duty and customer vulnerability. The firm launched its multi-award-winning MARS platform to help firms understand and monitor vulnerable customers and deliver good outcomes – as required by Consumer Duty. It is in use across financial services and the utilities sector, enabling businesses to adopt a consistent approach to identifying vulnerable characteristics and generate an objective Resilience Rating – much like a credit score.

The MARS platform meets the system requirements set out in the new guidance, providing financial services firms with a proven tool that can be used as a standalone system or integrated into other systems via an API (application programming interface).

The guide is available for download from the CII.

To find out more about MARS or access a free trial, visit: morganash.com/mars or phone: 0330 159 8162.