Fair value is not demonstrated simply by charging a reasonable fee. Firms need to be able to explain the benefits customers receive, the evidence supporting their conclusions and the action they take when something does not look right.
Fair value has been a central part of the Consumer Duty since its introduction. The work highlighted by the FCA around the delivery of ongoing advice reviews in the past year or so shone a light on the importance of fair value assessments going beyond price and really focusing on what clients received (or did not receive) for the fees they paid.
The FCA's published findings continue to highlight the importance of robust, evidence-based assessments. Its July 2026 update on the price and value outcome reinforces that fair value should be embedded in firms' decision-making, governance and ongoing monitoring, rather than treated primarily as a retrospective compliance exercise.
The FCA's 2026 wealth management survey also highlights mixed outcomes in fair value assessments, including concerns about how pricing affects clients with smaller portfolios.
I have worked with firms to strengthen their fair value assessments, but I have also seen the difficulties that arise when firms are required to retrospectively evidence and justify their conclusions under scrutiny. For financial advice firms, this makes it important to look beyond whether an assessment has been completed and critically evaluate the process followed, the quality of the analysis and whether sufficient evidence exists to support the conclusions reached.
Here are five areas I would encourage firms to consider.
1. Relying too heavily on competitor comparisons
Comparing your fees with those of similar firms can provide useful context. However, being broadly in line with the market does not, by itself, demonstrate fair value.
Two firms may charge similar fees but provide different levels of service, expertise, accessibility and support. Equally, a fee above the market average is not automatically unfair, provided the firm can substantiate the value it delivers.
The question to ask: Can you explain why your charging structure represents fair value in the context of the benefits your customers receive, rather than simply demonstrating that your fees are competitive?
2. Describing the service without demonstrating its value
An assessment might list annual reviews, production or access to timely reports and ongoing access to an adviser. These are relevant considerations, but listing services is not the same as evaluating their value.
The assessment should consider the nature and quality of the service, the benefits customers can reasonably expect, any relevant limitations and the price they pay.
It should also consider whether the service is being delivered as intended. Charging an ongoing fee where a customer is not receiving the agreed service can raise a particularly important question about value.
The question to ask: Does your assessment explain the relationship between the service provided, the benefits customers actually receive and the fees charged?
3. Reaching conclusions without sufficient supporting evidence
Statements such as “our fees are reasonable” or “we believe our service represents good value” express a conclusion. They do not explain how the firm arrived at it.
A robust assessment should identify the information considered, explain the reasoning behind the conclusion and demonstrate how relevant evidence supports the firm's judgement.
That evidence will depend on the firm's business model and may include service delivery information, customer feedback, complaints, charging data and other relevant indicators of customer outcomes.
The objective is not to accumulate data for its own sake. It is to use relevant information to support a reasoned assessment.
The question to ask: If someone independent of the assessment challenged your conclusion, could you demonstrate how you reached it and why the evidence supports it?
4. Overlooking differences between customer groups
A firm-wide conclusion may conceal differences in the value received by different customers.
For advice firms, you may consider portfolio size, fixed and percentage-based fees, the nature of the service provided and differences in customers' needs. Vulnerability and the potential difference in value for these clients is another area of focus for the FCA.
Firms should be able to explain how they have considered relevant differences and whether their conclusions remain appropriate across the customer groups they serve.
The question to ask: Have you considered whether your proposition delivers fair value across relevant customer groups, rather than relying solely on an overall average?
5. Treating the assessment as a document rather than a decision-making tool
A fair value assessment should help inform decisions about the firm's proposition. It should not simply be completed, approved and filed away.
Where an assessment identifies a potential weakness, the firm should consider what action is appropriate, document its reasoning and establish suitable monitoring to understand whether the issue has been addressed.
Equally, if the firm concludes that no change is necessary, it should be able to explain why. Obviously, the more consecutive years where you show no change makes your explanation all that more important.
This is where the assessment becomes part of the firm's governance and ongoing oversight, rather than an isolated compliance exercise.
The question to ask: Can you demonstrate what decisions have resulted from your assessment and how you monitor whether your conclusions remain valid?
A final thought
The FCA allows firms to take a proportionate approach to fair value assessments, reflecting the nature, scale and complexity of their business. A smaller advice firm does not necessarily need the same processes or pages and pages of data to demonstrate a robust approach.
However, proportionate should not mean superficial.
The real test is whether a firm can explain and evidence why the price customers pay is reasonable relative to the benefits they receive, and demonstrate that it takes appropriate action when its assessment identifies a potential concern.
It is worth asking yourself one final question:
If the FCA asked you to explain your fair value assessment tomorrow, would you be confident in both the conclusion and the evidence supporting it?
A useful starting point is to revisit your latest assessment against the five questions above and identify whether any areas would benefit from further explanation, evidence or review.
Danbury Compliance provides compliance consultancy services to wealth managers and financial advisers, in particular supporting firms with Consumer Duty.