FCA publishes “near-final” rules for targeted support
In December 2025 the FCA published its “near-final” rules for targeted support in relation to pensions and investments. Targeted support will be more bespoke than current guidance-based services but more general than advice provided on an individual basis. It will see people receive suggestions developed for a group of consumers with common characteristics rather than based on the individual’s detailed circumstances. The aim of this proposal is to help close the “advice gap” and boost access to financial support across the UK.
There have been some changes to the rules. For example, the FCA is not proceeding with the proposal for a mandated break between targeted support and an annuity “sales journey”. The FCA is also simplifying its rule regarding ongoing monitoring of the targeted support service.
The FCA expects the final rules to take effect from 6 April 2026.
FCA consults on rules for digital pension planning tools
The FCA is consulting on a new regime for interactive digital pension planning tools for personal pension schemes that are already in existence. The FCA’s current pension projection rules were designed before online engagement was commonplace, and firms have complained that the rules are limiting the development of effective and engaging planning tools. The new regime will apply where a firm offers a projection in digital form which allows consumer interaction and where the firm holds all the underlying information for that scheme. The existing rules will continue to apply for “static” projections such as communications sent to customers.
The FCA sets out a detailed set of requirements for interactive digital projections. For example, there are certain assumptions that the customer must be allowed to interact with such as the date on which the customer will access their pension, the level of contributions, the rate of return and the method of accessing benefits. The proposed rules say that firms should consider and aim to minimise the risk of the customer relying on overly optimistic or simplified simulations. Assumed rates of return must accurately and fairly reflect the investment potential of the relevant investment options.
The consultation closes on 12 February 2026. The FCA does not give a date on which the new rules will come into force, but aims to publish a policy statement and final Handbook text in the second half of 2026.
FCA consults on new framework for non-advised transfers between personal pension schemes
The FCA is consulting on a new framework for non-advised transfers between personal pension schemes. The proposed measures have been prompted by concerns that members are making decisions to consolidate their pension pots for the sake of simplicity without considering factors such as fees and charges, investment choice or the potential loss of guarantees. The FCA says that the DWP will consider whether similar requirements for occupational pension schemes would be beneficial.
Under the FCA proposals an “engaging firm” will not be able to offer the facility for a member to request a transfer until the member has been presented with information to enable a comparison between transferring and receiving schemes. The term “engaging firm” means a firm communicating with a non-advised client for the purpose of effecting a transfer. So the engaging firm could be the provider of the receiving scheme or a firm acting as an intermediary with a view to arranging a transfer.
The engaging firm will be required to gather information from the potential transferring schemes using a standardised template. The transferring schemes will be required to provide the required information within 10 working days. This includes features such as guaranteed investment returns, a protected pension age, charges, investment options, decumulation options and whether employer contributions are being made. The engaging firm will then be required to present the relevant information to the member alongside comparable details for the receiving scheme. Members may opt out of the information gathering process, but firms must not encourage them to do so.
The FCA is not currently imposing an “explicit ban” on incentives to transfer, but says that incentives which undermine the significance of the information presented or which encourage opting-out of the information exercise are unlikely to be compatible with the Consumer Duty.
The consultation closes on 12 February 2026. The FCA does not specify a coming into force date for the new rules, but aims to publish a policy statement and final Handbook text in the second half of 2026.
Value for Money consultation response and further consultation
In January the FCA published a response to its consultation on the Value for Money (VfM) Framework together with a further consultation on proposed changes and a discussion paper. The idea behind the VfM Framework is to provide a consistent framework for assessing the performance of workplace DC arrangements, and to require pension providers to take action where an arrangement fails the VfM test. The consultation relates to firms operating personal pension schemes. It is intended that an equivalent framework will apply to occupational pension schemes, but SSASs will be out of scope. For more detail, click here.
FCA to consult on pension charge cap
In a letter to the Prime Minister in December 2025, the FCA announced that it plans to consult on the pension charge cap in 2026 “so consumers are not disincentivised from investments due to higher performance fees.”
FCA updates and removes references to Principles 6 and 7 and Treating Customers Fairly
In its Consultation Paper “Targeted Clarifications of Handbook Materials” the FCA notes that, to avoid overlapping standards, Principles 6 (treating customers fairly) and Principle 7 (requirement to communicate information in a way which is clear, fair, and not misleading) do not apply to the extent that the Consumer Duty applies. However, there remain references in the FCA Handbook to the previous standards, and the FCA has had feedback that these are causing confusion. The FCA is therefore consulting on updating references to Principles 6 and 7 throughout its Handbook. The updates will, where applicable, replace references to Principles 6 and 7 with references to the Consumer Duty. The updates will also clarify the scope of Principles 6 and 7 which still apply where the Consumer Duty does not.
FCA statement on Consumer Duty expectations where firms work together to manufacture products or services
In December 2025 the FCA published a statement on its expectations where firms work together to manufacture products and services. The FCA’s view is that regulated firms in the distribution chain can rely on each other “where reasonable” to comply with the relevant rules. However, the arrangements between firms should make it clear which firm is responsible. The statement says, “It shouldn’t be possible for responsibility to slip between the cracks.”
FCA guidance on non-financial misconduct
In December 2025 the FCA published its final guidance on how financial services firms should tackle non-financial misconduct. Changes made in response to feedback include clearer alignment with employment law, clarification that managers’ accountability is relative to their knowledge and authority, and clarification that firms are not expected to investigate trivial or implausible allegations.
FCA review of customer outcomes delivered by smaller mutual life insurers
In January the FCA published its findings on how smaller mutual life insurers meet Consumer Duty requirements and deliver good customer outcomes. The FCA looked at firms that it identified as having assets of under £1bn.
Key findings
The FCA found that most firms had broad statements describing their target markets which offered little clarity on which customers the products would not be suitable for.
In relation to assessing whether customers are receiving fair value, the FCA found that some firms relied on price comparisons and benchmarking which was not always effective due to the uniqueness of the product features. Benchmarking may help a firm understand whether its product is a price outlier, but does not on its own enable the firm to understand whether the product is fair value. In relation to savings products, the FCA says that firms should monitor and regularly review the outcomes their customers are experiencing in practice. Prompt and specific actions should be taken if consumers are found to be at risk of not receiving fair value, and the success of such actions should be monitored.
Where mutuals operate a with-profits fund into which both non-profits and with-profits insurance business is written, the FCA flags that firms must consider the requirements of COBS20.2 (treating with-profits policyholders fairly) when formulating their business plan and sales of new (both non-profit and with-profits) business.
The FCA says that firms must consider scenarios leading to potential non-viability and to have detailed wind-down plans to minimise customer harm in such circumstances.
The FCA makes clear that it expects firms to take reasonable steps to identify and reconnect with customers with whom they have lost contact.
Ombudsman upholds complaint where cash reserves used to pay death benefit without due authorisation
The Deputy Pensions Ombudsman (DPO) has upheld a complaint where the administrator and professional trustee of a SSAS allowed a disproportionate share of a SSAS’s cash reserves to be used to pay a lump sum death benefit without this being duly authorised by all the trustees (CAS-45657-B7R7). Once the lump sum death benefit had been paid, the member fund of the SSAS’s remaining member, Mr R, was disproportionately comprised of non-cash assets including illiquid assets and some investments in relation to which trading had been suspended. This was a particular issue for Mr R as he wished to take a transfer value to a different scheme. For more detail, click here.
Ombudsman upholds complaint against professional SSAS trustee in “lead case”
We have previously reported on determinations where the Pensions Ombudsman has upheld complaints against the professional trustee of a SSAS for allowing high risk investments to proceed without considering their appropriateness and/or the need for diversification of investments. Where multiple members of SSASs with the same professional trustee have brought complaints on very similar facts relating to the same high risk investments, the Ombudsman has adopted the approach of deciding a “lead case” on the basis that his determination will also apply to a number of other similar cases listed in an appendix to the lead case determination. In the latest determination involving the same professional trustee (CAS-44560-Q1C8), the Ombudsman has upheld a complaint in a lead case involving investments in storage pods and airport parking spaces. In line with other similar determinations, the Ombudsman directed that the professional trustee should bear responsibility for 80% of the investment losses suffered by the members. This reflected that the members were themselves trustees, but that that the professional trustee was in a position to apply its professional judgment as to the suitability of investments in a way that member trustees were not.
Ombudsman upholds complaint where death benefit decision based on fraudulent statement
The Deputy Pensions Ombudsman (DPO) has upheld a complaint from a deceased member’s daughter where the pension provider paid the whole of a lump sum death benefit to the member’s son on the basis of the son’s fraudulent claim that he was the deceased’s only child (CAS-84909-V2W7). For more detail, click here.
Complaint not upheld against transferring scheme where pension fund lost following transfer
The Deputy Pensions Ombudsman (DPO) has not upheld a complaint against the transferring scheme trustee where a member suffered substantial losses after taking a transfer value from his employer’s occupational scheme to another occupational scheme (CAS-54901-V6R7). For more detail, click here.
Trustees entitled to recover winding-up lump sum paid after member’s death
The Pensions Ombudsman (TPO) has upheld the right of trustees to seek repayment of a winding-up lump sum from a member’s estate where the member had died before the winding-up lump sum was repaid (CAS-89142-L1R8). For more detail, click here.
PASA guidance on use of AI in pensions administration
The Pensions Administration Standards Association (PASA) has published guidance on the use of AI in pensions administration. Examples of possible uses of AI include the use of chatbots to handle common enquiries and automation of routine forms such as change of personal details. The guidance stresses that high quality data is essential when using AI, as it affects how AI learns and its accuracy. The guidance highlights potential risks with AI, for example that administrators may overestimate AI’s capabilities and therefore fail to provide the necessary human oversight.
We have already seen examples of administrators seeking to record trustee meetings so that they can then use AI to scan the recording to produce the minutes. Such an approach carries legal risks. For example, the recordings might have to be disclosed in court proceedings where someone is seeking to challenge a trustee decision. There is also the possibility that recordings of discussions about a specific member may need to be disclosed if the member makes a data subject access request under data protection legislation.
PASA guidance on Data (Use and Access) Act 2025
The Pensions Administration Standards Association (PASA) has published an “industry paper” on the Data (Use and Access) Act 2025 in which it identifies the key elements of the Act which it considers significant for pension schemes. These are:
- the removal of many of the previous restrictions on significant automated decision-making, which could pave the way for improved automation in scheme administration;
- the elevation of digital verification services to a statutory footing, creating an audited route for schemes to source identity checks which meet required standards in relation to security and data minimisation;
- a new “recognised legitimate interests” lawful basis for processing personal data which includes “safeguarding vulnerable individuals”;
- confirmation that a data controller is only required to conduct a “reasonable and proportionate” search in response to a data subject access request (DSAR), and that where a data controller reasonably requests more information regarding what a DSAR relates to, this “stops the clock” for the relevant time limits until the data subject provides the information; and
- a new requirement for data controllers to have a complaints procedure.
HMRC approach to cancelled PCLS and UFPLS transactions
In our last Update we reported on HMRC’s newsletter 173 in which HMRC warned that the tax consequences of taking a lump sum cannot be reversed by repaying the lump sum to the scheme. In its newsletter 174 HMRC warns that it may challenge alternative interpretations of tax-free lump sums that have been returned after 5 December 2024 when the position was made clear.
HMRC guidance on checking whether member has tax protections
In January 2026 HMRC published updated guidance for scheme administrators on how to check whether a scheme member has tax protections such as enhanced protection.
Changes to salary sacrifice from April 2029
In the November 2025 Budget it was announced that from April 2029 only the first £2000 of pension contributions that an employee makes via salary sacrifice each year will be exempt from National Insurance contributions. In December the Government published the National Insurance Contributions (Employer Pensions Contributions) Bill to make the changes.
Pensions Regulator publishes new scheme administration guidance
In December 2024 the Pensions Regulator (TPR) published new guidance on scheme administration for trustees of occupational pension schemes which replaces TPR’s previous “Administration of a DC Pension Scheme” guidance. A new element of the guidance is the expectation that schemes should have a written administration policy. As the guidance is general rather than SSAS-specific, it is not immediately clear to what extent TPR’s expectations would be modified in relation to SSASs. However, some suggested elements of the administration policy clearly are relevant to SSASs, for example clarity as to the roles and responsibilities of different parties involved with the scheme such as trustees and administrators, and clarity as to what information the administrator needs to receive and who the scheme administrator reports to.
Consultation on improving the standards of pension scheme trusteeship, governance and administration
The Government’s consultation on trustees and governance is seeking views on some significant changes, including mandatory accreditation for professional trustees, limits to the length of trustee appointments, the creation of a directory of all trustees, and the introduction of a requirement for scheme administrators to be registered with the Pensions Regulator (TPR), with the TPR having the power to deregister administrators. It does not specify a timescale for implementation of the changes.
As the consultation relates to occupational pension schemes generally, it is not clear to what extent SSASs might be exempted from any of the proposed measures. The consultation does comment that independent surveys conducted on TPR’s behalf have consistently shown that small and micro schemes generally have lower standards of governance than larger schemes, particularly in relation to investment. It also comments that a TPR survey found that a professional trustee tended to have a positive influence on the governance of small and micro schemes.
The consultation runs until 6 March 2026.
Mandatory tax adviser registration: exemption where HMRC interactions required by legislation
In its Newsletter 176 HMRC has flagged that the new tax adviser registration requirements contained in the Finance (No.2) Bill are subject to an exemption where an adviser interacts with HMRC in order to comply with an obligation under an enactment. This means that pension scheme administrators will not be under an obligation to register with HMRC as tax advisers solely by reason of providing information to HMRC in order to comply with their statutory duties. The broad definition of “tax adviser” under the legislation had previously raised concerns that this could be the case.
Guidance on supporting customers unable to make their own decisions
In December 2025 the Office of the Public Guardian, in conjunction with the FCA and others, published guidance on “Supporting customers who may not be able to make their own decisions”. The guidance covers the legal test for mental capacity and provides information about lasting powers of attorney, enduring powers of attorney, deputyship orders and guardianship court orders. It is intended to help policy makers in financial services companies provide information to staff who are dealing with situations where a power of attorney or deputyship or guardianship order is in place.
