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The Financial Conduct Authority (FCA) has published findings from its supervisory work in consumer finance, highlighting good practice and areas for improvement in how firms assess fair value and demonstrate positive customer outcomes under the Consumer Duty.
The findings, accompanied by an FCA blog, do not introduce new regulatory requirements but reinforce the importance of using customer data to demonstrate that the total price paid for a product or service is reasonable in relation to the benefits customers can expect.
The FCA encourages firms to assess value across different customer groups, including customers in vulnerable circumstances, and to consider the full range of fees, charges and non-financial costs. It also highlights the need for clear communication of charges and ongoing monitoring of repeat or cumulative fees that could cause foreseeable harm. Competitor price comparisons alone are not sufficient to demonstrate fair value.
For BVRLA members subject to the Consumer Duty, the findings provide an opportunity to review existing fair value assessments and how customer outcomes are monitored. This includes considering whether fees are clearly explained, how charges affect different customer groups and whether sufficient evidence is available to support assessments. Smaller firms can take a proportionate approach, drawing on existing information such as complaints, arrears, cancellations and customer feedback.
Members are encouraged to read the FCA's fair value findings and accompanying blog on fair value in practice. Questions or practical concerns can be directed to James Vickery.
