Jessica joined RWA in 2018, having graduated with a First Class Honours degree in Film Studies. Her role as a content designer involves developing new and engaging e-learning modules as well as assisting in the creation of articles for Insight.
The FCA has conducted a review of fair value assessment frameworks in the lead up to the implementation of the Consumer Duty which comes into effect on 31 July 2023. The aim of the review was to assess how firms are committed to offering fair value to their consumers in line with requirements set out in the Duty.
In total, 14 firms’ fair value assessment frameworks were sampled, measuring how firms in different sectors were approaching the price and value requirements in relation to retail banking, consumer investments, payments and digital assets, and consumer finance.
The frameworks were all assessed against 5 key targets:
Whilst the sample was not a detailed representation of the wider industry, the results show that a majority of firms are already making substantial efforts in their commitment to offering fair value to consumers under the Duty. There were, however, some concerns that some firms were not able to provide adequate evidence for why their products and services provide fair value.
Some firms also did not appear to properly consider outcomes for different groups of customers, with a focus instead on broader analysis of groups. The concern with this is that the broader group averages could disguise where outliers such as those on low incomes or in vulnerable circumstances - are receiving poor value.
In a recent speech, FCA’s Sheldon Mills, Executive Director, Consumers and Competition spoke of the results of the review, as well as what firms must do in the lead up to the implementation of the Consumer Duty.
“Firms should use the time remaining in the run-up to 31 July to ensure that their fees are fair and transparent, and that particular groups of consumers are not disproportionately disadvantaged.”
Mills also emphasised the importance of fair value being about more than just price, and that value should include considerations for the quality and benefits of the product or service.
“We want firms to look at their product and really examine and challenge themselves about whether the cost of a product or service really is reasonable relative to the overall benefits.”
Following the review, the FCA have identified 4 key areas for improvement, and will continue to monitor and support firms based on their findings both in the run-up to, and beyond July 2023. The four areas for further consideration include:
To read the full FCA review, click here: https://www.fca.org.uk/publications/good-and-poor-practice/consumer-duty-findings-our-review-fair-value-frameworks
Users of the Development Zone can also find a range of Consumer Duty courses in their course catalogue, including:
For those not currently using the system, you can find out more and request a free 14-day trial here: https://mydevelopment.zone/#getStarted
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