Fair value assessments: what the FCA found in consumer finance

The FCA published Fair value in consumer finance on 29 October 2026 as a good and poor practice report. It draws on supervisory work across consumer credit lending, debt advice, credit reference agencies and credit information services, and debt purchasing, collection and administration. A focused review looked at fees and charges at firms that offer unsecured loans, credit cards, retail revolving credit, retail finance and high-cost credit. A third strand covered consumer hire and third-party ownership agreements for boilers, solar panels and air-source heat pumps.

The FCA says the examples "do not create new requirements or prescribe specific actions". The tests stay the same: the price and value outcome in PRIN 2A.4 and chapter 7 of the Consumer Duty guidance, FG22/5. The FCA also says the findings may be relevant to firms in other sectors. Mortgage and motor finance lenders can read them as a guide to how supervisors will test theirs.

The FCA will keep monitoring fair value, including fees and charges, through its supervisory work and the PSD and CCR009 returns.

Under the Consumer Duty, a product gives fair value where the amount paid is reasonable relative to the benefits. The firms the FCA praised applied that test to their own products and backed each conclusion with evidence.

Good practice included:

• counting the full expected total price, including contingent fees and non-financial costs such as customers' time and effort
• comparing that price with the benefits customers could reasonably expect, not only with the firm's own costs
• mapping value across the customer journey, from setting up an arrangement to complaints and bereavement
• assessing value by segment, such as credit risk, APR band, distribution channel and vulnerability
• monitoring outcomes against defined indicators, with thresholds that trigger investigation or escalation

One credit card provider quantified cashback, foreign exchange savings and other benefits and compared them with the fees, interest and other costs customers paid. It then contacted customers who paid more in monthly fees than they received in cashback.

Weaker assessments "relied heavily on assumptions, narrative statements or MI that lacked sufficient detail or supporting evidence". Some left out contingent charges, including charges that arise when customers fall into arrears. One assessment included a fee the firm no longer charged and omitted a fee customers could still incur.

Many firms treated the target market as one group. Some firms that used risk-based pricing reached a single product-level conclusion, which can hide material differences in what different pricing groups pay and the outcomes they get. Monitoring often did not set out the outcomes to watch, the metrics and data sources, ownership, frequency, quality assurance or thresholds for escalation.

Some complaints root-cause analysis recorded only the primary reason for a complaint, or excluded complaints that were not upheld. That can hide fee problems inside wider payment, service or technical issues. The FCA's line on smaller firms applies to every lender: "Proportionality does not mean a lower standard: firms must still be able to support their conclusions."

The FCA's Product Sales Data for Q3 2025 to Q2 2026 showed penalty charges on around 3% of consumer credit agreements, almost 28 million individual charges. Late repayment charges were the most common.

For fees, the FCA says monitoring should identify who pays them, how often they are applied, whether they accumulate and their impact on different customer groups. Good practice included reminders before a missed-payment charge, limits on the number of fees in a defined period, fee limits at product and customer level, and fee waivers during forbearance. CONC 7.7.5R still limits charges on customers in default or arrears difficulties to no more than necessary to cover the firm's reasonable costs.

The FCA also warns that "the existence of a control does not, by itself, demonstrate that it is working as intended or reducing the risk of harm". A grace period that nobody tests is not evidence.

Test your latest assessment against the findings:

1. Does the expected total price include every contingent fee you charge today, and none you have withdrawn?
2. Does each conclusion point to MI or customer outcome data, not only narrative?
3. Have you assessed value for each pricing band, each channel and for customers with characteristics of vulnerability?
4. Does your monitoring name the outcomes, metrics, owners, frequency and escalation thresholds?
5. Can you show who incurs repeat fees and whether your fee controls reduce them?
6. Does your complaints root-cause data capture secondary reasons and complaints that were not upheld?

Much of this evidence sits in case files and customer records, not in the fair value document itself. Curvestone's Compliance Checker reviews case files against your own policy and keeps a full audit trail, so outcome monitoring can draw on evidence from every file it reviews.