On 29 October 2026, the Financial Conduct Authority (FCA) published findings from its consumer finance supervisory work, highlighting good practice and areas for improvement in how firms assess, evidence and monitor fair value.
Background
In its consumer finance regulatory priorities report, the FCA set out that it would undertake risk-led reviews of potential consumer harm, such as whether fees and charges represent fair value.
Summary
The FCA sets out the following findings in relation to how consumer finance firms assess and monitor fair value, support their conclusions with appropriate evidence, and deliver good outcomes across customer groups, in particular:
- Structure and evidence supporting fair value assessments: The FCA found stronger firms took a holistic, proportionate and well-documented approach, bringing together relevant management information (MI), governance and evidence on customer outcomes. Weaker assessments relied on unsupported narrative, fragmented, incomplete or outdated evidence, and sometimes failed to consider how value could change over time. Proportionality does not mean a lower evidential standard.
- Assessing total price, costs and benefits: Good assessments considered the complete financial and non-financial costs customers might incur and compared the expected total price with reasonably expected benefits. Weaknesses included focusing on firms’ own costs, omitting contingent or current charges, insufficient consideration of non-financial costs, and inadequate assessment of value over long-term commitments.
- Assessing fair value for different customer groups: Better firms segmented customers by factors including credit risk, usage, pricing and vulnerability, then compared outcomes between groups. Others treated customers as homogeneous, inadequately analysed vulnerable customers or repeat fee-payers, and failed to use available segmentation and outcomes data effectively.
- Monitoring fair value and customer outcomes: Strong monitoring used defined indicators, thresholds and quantitative and qualitative evidence to identify differences between customer groups and trigger action. Poorer approaches lacked clear frameworks, sufficiently granular MI or processes for investigating and responding to adverse findings. Collecting data alone is insufficient.
- Using benchmarking to assess fair value: Effective benchmarking tested fair-value conclusions using appropriately selected comparators and investigated material differences. The FCA criticised unexplained comparator selection, insufficient justification for higher prices and comparisons based primarily on headline pricing. Benchmarking should supplement, not replace, a firm’s own fair-value assessment.
- Communicating fees and charges: Good practice involved prominent, timely and plain-language disclosure, supported by testing of customer understanding. Problems included late fragmented or unclear disclosures and insufficient prominence for long-term commitments. Testing should provide meaningful evidence of understanding rather than merely readability or engagement.
- Controls to reduce foreseeable harm from fees and charges: Better controls included payment reminders, grace periods, limits on repeat fees, and waiving or refunding charges for customers in financial difficulty. The FCA identified weaknesses in detecting repeat fee-payers, assessing cumulative charges and demonstrating that controls actually reduced foreseeable harm.
Next steps
The FCA made clear that firms should consider how the examples of good practice and areas for improvement may inform their approach to meeting their obligations under the Consumer Duty and that it will continue to monitor fair value, including firms’ approaches to fees and charges, through its supervisory work.
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