| Date Issued: | 29/10/2026 | Applicable to: | All firms | |
| Link(s): | Fair value in consumer finance | FCA | |||
Context
The FCA has published findings from its consumer finance supervisory work, highlighting good practice and areas for improvement in how firms assess, evidence and monitor fair value. Although drawn from the FCA’s supervisory work in consumer finance, these examples will be of interest to firms in other sectors when assessing, evidencing and monitoring fair value, in addition to consumer finance firms subject to the Consumer Duty.
Key points to note and next actions
The FCA reminds firms that the examples do not create new requirements or prescribe specific actions. Firms should apply judgement and take an appropriate and proportionate approach for their business, products and customers.
The FCA found examples of firms taking structured and proportionate approaches to assessing fair value, but also identified recurring areas where firms could improve their assessments, evidence and monitoring.
The findings are grouped under seven key themes:
- Structure and evidence supporting fair value assessment
- Assessing total price, costs and benefits
- Assessing fair value for different customer groups
- Monitoring fair value and customer outcomes
- Using benchmarking to assess fair value
- Communicating fees and chargesC
- ontrols to reduce the risk of causing foreseeable harm from fees and charge
Headline examples of good practice included:
- considering the full range of financial and non-financial costs (for example, consumers’ time and effort), alongside the benefits customers could reasonably expect to receive;
- supporting their fair value conclusions with relevant management information (MI) and evidence of customer outcomes;
- assessing outcomes for different groups of customers, including customers with characteristics of vulnerability;
- monitoring customer outcomes to identify and address potential fair value concerns and taking appropriate action where necessary;
- communicating fees and charges clearly and prominently, and using testing and monitoring to assess whether customers understood them; and
- using controls such as grace periods, limits on repeat or cumulative charges, and fee waivers or refunds to reduce the risk of causing foreseeable harm.
Headline areas for improvement were that some firms:
- did not fully account for fees and charges when assessing the expected total price customers might pay
- did not clearly explain how their fair value conclusions were supported by the evidence available or how the price paid by customers compared with the benefits they could reasonably expect to receive
- relied heavily on assumptions, narrative statements or MI that lacked sufficient detail or supporting evidence
- gave limited consideration to non-financial costs (such as consumers’ time and effort), how value might change over time or outcomes for different customer groups, including customers with characteristics of vulnerability
- did not communicate fees and charges clearly, prominently or at the right time to support informed customer decision-making
- did not adequately monitor repeat or cumulative charges or assess their impact on customer outcomes
- could not demonstrate that their controls were appropriately designed, operating effectively or reducing the risk of causing foreseeable harm, particularly for customers experiencing financial difficulty