FCA reviews fair value assessment practices three years after the implementation of Consumer Duty
What does 'fair value' look like in practice? Three years into the Consumer Duty, here’s what we’ve learned.
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FCA summarizes the results of its review of consumer finance firms’ fair value assessment, evidence and monitoring work three years after the implementation of Consumer Duty. The regulator notes that stronger practices quantify and compare the fees paid by customers with the benefits they could reasonably expect to receive, and distinguish between customer groups based on factors such as credit risk, product usage and vulnerability. FCA also reminds firms to verify whether customers understand the total price and long-term financial commitments, and that “pay as you save” marketing in leases of domestic energy equipment must not create the impression that savings or affordability are guaranteed.
FCA translates fair value into verifiable customer outcomes and provides firms with a specific framework for assessment and monitoring across three areas: evidence, customer segmentation and understanding of fees.
Source:FCA (UK) · fca.org.uk