Firms preparing to offer the FCA’s new targeted support service risk falling foul of Consumer Duty if they fail to properly identify and support vulnerable customers, according to MorganAsh.

The warning comes as the Financial Conduct Authority confirms that its targeted support framework will proceed, with near-final rules published last week and a provisional go-live date of April 2026, subject to the necessary legislative changes. Firms will be able to submit applications from March 2026.

The new framework will allow firms to make recommendations to groups of consumers with shared characteristics, without carrying out a full individual suitability assessment. The FCA estimates the service could support at least 18 million people over the next decade, improving access to help around investments and pensions.

However, with targeted support explicitly underpinned by Consumer Duty, MorganAsh has warned that firms must not overlook the regulator’s expectations around customer vulnerability, particularly the need to identify vulnerable customers and understand their characteristics and needs.

Clause 4.12 of the FCA’s policy statement states: “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 comments follow the launch of new vulnerability management guidance from the Chartered Insurance Institute and the Personal Finance Society. The guidance is intended to address knowledge gaps and help firms turn the principles-based requirements of Consumer Duty into practical action.

It also sets out higher expectations for IT systems, processes and data infrastructure to support effective vulnerability management – a benchmark that MorganAsh says has effectively become the standard applied by the Financial Ombudsman Service.

Gething added: “It quickly becomes clear that deploying digital vulnerability management is an absolute must for firms intending to provide targeted support.

“Not only is this approach in line with the new guidance, it brings consistency and accuracy, ensures robust data and delivers real efficiencies.

“That efficiency 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 specialises in Consumer Duty and customer vulnerability and is best known for its MARS platform, which is used across financial services and the utilities sector to help firms identify, monitor and support vulnerable customers.

The platform enables firms to take a consistent approach to identifying vulnerable characteristics and produces an objective Resilience Rating, which MorganAsh likens to a credit score. It can be used as a standalone system or integrated into existing technology via an API.

The new vulnerability management guidance is available to download from the CII.