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FCA article: “What does ‘fair value’ look like in practice?”

Oct 29, 2026 | FCA

Date Issued:29/10/2026Applicable to:All firms
Link(s):  What does ‘fair value’ look like in practice? Three years into the Consumer Duty, here’s what we’ve learned. | FCA

Context

The FCA has published an article by Alison Walters, FCA Director of Consumer Finance, in which she highlights questions firms can use to challenge their approach to assessing and monitoring fair value.  The article seeks to highlight, three years into the Consumer Duty, what the FCA has learned.

Key points to note and next actions

  • Fair value is a simple yet important principle at the heart of the Consumer Duty: the price customers pay should be reasonable, relative to the benefits they get. But applying that principle in practice requires judgement. 
  • The FCA is seeing clear differences between firms that have embedded fair value into their approach and those that still need to strengthen their assessments, evidence and monitoring.
  • The FCA recently reviewed how firms across the consumer finance market assess, evidence and monitor fair value (see above). We also carried out focused work on fees and charges across a range of credit products, and supervisory work on consumer hire and third-party ownership agreements for home energy infrastructure.
  • Many firms are getting it right, building fair value into how they design, price and monitor their products. Others are missing things that, in hindsight, could have been avoidable. Where firms fell short, a recurring issue was the evidence supporting their conclusions.
  • A common feature of stronger approaches was that firms supported their conclusions with evidence rather than relying on assumptions.
  • This does not need to always require complex modelling or new data. Smaller firms may be able to draw on information they already hold, including complaints, arrears, customer feedback and product usage.
  • As UKGI has long believed, the key thing is to ‘show your workings out’ – evidence how you got to the point you arrived at: what your evidence shows, how it supports your conclusion, what you’d do if it didn’t.

The article asks:

  • Does your evidence actually tell you something, or just describe your product?
  • Are you assessing fair value for different customer groups?
  • If customers can’t picture the real cost, does the price even matter?

Questions firms can use to challenge their approach to assessing and monitoring fair value are:

  • Does your evidence tell you something meaningful about customer outcomes, or does it simply describe your product?
  • Does your target market behave as one group once you look closely?
  • Can customers understand the total price they might pay and the financial commitment they are entering into?