That’s the message from Graeme Reynolds, Director of Competition and Interim Director of Insurance at the FCA, posted in a recent FCA blog on 3 February 2026.
But what does ‘fair value’ mean in practice – and how can firms provide more robust evidence that signals to the FCA that they’re paying it due diligence within their culture and day-to-day activities?
In the FCA’s view, fair value is about asking a simple question: are customers paying a reasonable price for a product, compared to the benefits they get in return?
Fair value in the cash savings market was one of the first areas the regulator looked at after the introduction of the Consumer Duty, having been prompted by complaints that savers weren’t seeing the benefits of high base rates.
Firms were challenged to show their working; to demonstrate that they were charging reasonable prices in relation to the costs paid and the service they delivered.
Whilst some firms could do this, others didn’t have the right processes in place to make a high-quality assessment. Or they had the processes in place but weren’t implementing them in practice.
In our recent webinar – Kick-Start 2026: Conduct, Culture & Consumer Duty – What Firms Must Get Right – hosted in conjunction with regulatory consultancy firm, Ocorian, 32% of the 720 senior financial services professionals we polled said that they ‘lacked credible evidence’ that their culture supports fair value and good customer outcomes in practice.
In the accompanying session paper from this webinar, we discussed some key evidence points that could support firms to better demonstrate that their culture supports fair value.
Download the full discussion paper here to learn more.
Here are some of the key discussion points raised in the paper:
- While many firms struggle with the abstract nature of pricing intangible benefits – such as “peace of mind” – the path to a robust fair value assessment is often found in practical, data-driven steps. A successful assessment is not just a theoretical exercise but a grounded evaluation of whether a firm’s commercial hypothesis matches the reality of its customer outcomes.
- Most firms operate under a defined charging model, which represents their “hypothesis” of how costs should be distributed across their client base. Whether this model is uniform or tiered, the regulatory challenge lies in comparing this intent against “data in arrears.”
- Analysis often reveals a distribution curve where, while the bulk of clients sit in the expected middle ground, significant outliers exist at the fringes. At one end, firms may find they are notionally undercharging – potentially a matter of commerciality or discounting strategy. At the other, more concerning end, subsets of customers may be paying two or three times the expected amount. Identifying these outliers is the first step toward mitigating regulatory risk; it allows firms to intervene, investigate the root cause, and fix the disparity before it draws formal scrutiny.
- A common misconception is that the “fair value” framework triggers a “race to the bottom” regarding price. On the contrary, the FCA’s focus is on the relationship between price and benefit. A higher-priced product can still represent excellent value if the benefits provided are commensurate and tangible.
- To evidence this, firms must move beyond sentiment and track the “reality of the benefit.” This involves monitoring concrete service markers, such as the frequency of client calls, the delivery of scheduled reports, and the execution of suitability changes. By bringing together the hypothesis of the service and the reality of its delivery, firms create a grounded evidence set. This quantitative data provides a much stronger justification for a firm’s approach than relying solely on subjective customer views regarding the price of “peace of mind.”
- The financial advice sector provides a clear example of the regulator’s primary concerns. When investigating ongoing service fees, the FCA’s focus has often been remarkably simple: Did the customer get what they paid for? The value of regular, high-quality advice is undisputed, but that value only exists if the service is actually delivered.
- The regulator has found that many firms lack the effective tracking required to identify when services have been missed. This has led to a direct challenge: if a firm is charging for a service it cannot – or does not – deliver, the service model itself must be questioned. Firms must ensure that if a client is unable to engage with the planned service, or if the firm cannot fulfil its promise, the service is either adapted, or the client is moved to a more appropriate option.
*This blog contains information intended for general guidance only. The answers are not offered as advice nor as representing the opinion of the Financial Conduct Authority (FCA). They are an interpretation of expectations and will be subject to change in response to regulatory guidance and other factors. It should not be used as a substitute for professional and/or legal advice.