The Financial Conduct Authority (FCA) recently revisited a deceptively simple question in its blog “What do we mean when we say fair value?”– a concept that sits at the heart of the Consumer Duty and continues to shape expectations for firms across the consumer credit sector.
At its core, “fair value” is not about setting the lowest price or limiting profit. Instead, the FCA frames it as a straightforward test: are customers paying a reasonable price for the benefits they receive? This shifts the focus away from internal pricing strategies and towards demonstrable customer outcomes. Firms must be able to evidence that their products and services deliver a fair deal and if they cannot, the FCA expects them to reassess.
Importantly, fair value goes beyond price alone. The regulator expects firms to consider the full package of costs and benefits, including service quality, product features, and even non-financial factors such as customer effort or accessibility. In practice, this means firms must adopt a holistic and evidence-based approach to product governance, rather than relying on assumptions or market comparisons.
The FCA has been clear that fair value is about outcomes, not process. It is not enough to have a framework in place; firms must demonstrate that their decisions lead to good customer outcomes in reality. This creates a continuous obligation to review products, monitor performance and take action where value is not being delivered.
For consumer credit firms, this presents both a challenge and an opportunity. The challenge lies in gathering the right data, embedding robust assessment frameworks, and ensuring that pricing, fees, and charges remain aligned with customer benefit. The opportunity, however, is to build trust, improve customer retention and differentiate through genuinely customer-centric practices.
This is where the role of a strong principal firm becomes critical. Appointed Representatives (ARs) must rely on their principal not only for regulatory oversight but also for guidance, governance frameworks and ongoing support in meeting Consumer Duty expectations. A proactive principal firm can help ensure that fair value assessments are consistent, well-documented and aligned with FCA expectations, reducing regulatory risk and enhancing overall compliance.
For firms working with us at Consumer Credit Compliance, having that structured support is essential. Navigating fair value requirements in isolation can lead to gaps in evidence, inconsistent assessments, or missed risks. With the right principal oversight, firms are better equipped to challenge their own products, adapt to regulatory scrutiny, and ultimately deliver better outcomes for their customers.
