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Consumer Duty Fair Value Assessments: A Practical Guide for IFAs
Here’s a question that keeps compliance officers awake at night: if the FCA knocked on your door tomorrow and asked you to prove your fees represent fair value, what would you show them?
Not your fee schedule. Not your terms of business. Not a document that says “we believe our services offer good value.” The regulator has seen all of those—and dismissed them as inadequate.
Fair value assessment is the area of Consumer Duty causing most headaches for advice firms. The FCA has made wealth and advice firms’ fair value practices a priority focus for 2025/26, with specific engagement planned through its Raising Standards Together programme. Translation: they’re coming to look, and they’re expecting substance.
The frustrating part? Most advisers know they deliver genuine value. They spend hours helping clients navigate complex decisions, provide reassurance when markets tumble, and coordinate with solicitors and accountants on behalf of families who’d otherwise be overwhelmed. But when it comes to documenting that value in ways the regulator accepts, many firms are still winging it.
This guide aims to change that.
Let’s start with what fair value actually means
The FCA’s definition sounds straightforward. Under PRIN 2A.4, value is “the relationship between the amount paid by a retail customer for the product and the benefits they can reasonably expect to get from the product.”
Simple enough. But here’s where firms go wrong: they treat this as a fee comparison exercise. Our charges are roughly in line with competitors, so we must be offering fair value. Job done.
The regulator torpedoed that logic in its September 2024 good and poor practice update. Yes, benchmarking matters. No, you can’t rely solely on it. The FCA wants firms to “think critically about the ultimate customer outcomes, instead of seeking to justify the current approach to pricing.”
Read that again. Instead of seeking to justify the current approach to pricing. They’re explicitly warning against backwards-rationalisation—starting with your fees and working backwards to explain why they’re fine.
A proper fair value assessment starts from the client’s perspective. Not “are our fees competitive?” but “what do clients actually receive for what they pay—and is that reasonable?”
Three things to assess
The FCA’s rules require you to consider at least three elements:
What clients actually get. The nature of your service, including all the benefits provided. For ongoing advice, that means spelling out exactly what’s included: suitability reviews, portfolio monitoring, rebalancing, access to an adviser, retirement planning updates, tax planning conversations. Be specific. “Comprehensive financial planning” tells the regulator nothing.
What clients don’t get. Any limitations on your service. If you don’t handle inheritance tax planning or pension transfers, say so. If your ongoing service excludes ad-hoc meetings beyond the annual review, be clear. These limitations affect the value equation.
The full cost. Not just your advice fee—the total price clients pay over the lifetime of the relationship. Platform charges. Fund costs. Transaction fees. Everything that comes out of their pot.
One firm cited in the FCA’s review argued its fees represented fair value because all charges were disclosed and agreed with clients. The regulator’s response? Disclosure isn’t evidence of value. It’s a minimum requirement you have to meet anyway.
Where your fees sit in the market
You can’t assess fair value without understanding what clients typically pay elsewhere. This isn’t about racing to the bottom on price—it’s about context.
NextWealth’s Fee Benchmarking Report 2025 gives us current numbers. The average ongoing advice fee has risen by 9 basis points since 2023, with more advisers now charging between 0.91% and 1%. Asset-based fees remain dominant (70% of advisers), with fixed fees second at 29%.
Total client costs—advice, platform, and fund charges combined—averaged 1.89% per annum in 2024.
Here’s the encouraging bit: 85% of clients say they understand their fees, and 76% believe they receive good value for money. Most advisers are communicating value effectively. But that also means the FCA has limited patience for firms whose clients feel shortchanged.
If your total client costs are significantly above 1.89%, you need a clear story about why the additional cost delivers additional value. And “we provide excellent service” won’t cut it.
Problem with percentage-based fees
Let’s address the elephant in the room.
If you charge 1% of assets under advice, a client with £1 million pays you £10,000 a year. A client with £100,000 pays you £1,000. Does the millionaire receive ten times more service? Almost certainly not. The annual review takes similar time. The portfolio construction is comparable. The regulatory requirements are identical.
The FCA knows this. Their September 2024 feedback specifically flagged the issue: “While fees based upon a fixed percentage of assets under advice are not inherently bad, they do increase the risk of poor value. This is especially the case where firms serve clients whose wealth levels and needs/objectives vary significantly.”
This doesn’t mean you have to abandon percentage-based charging. But your fair value assessment must acknowledge the differential and either justify it or show how you’re addressing it—through tiered rates, fee caps, or differentiated service levels.
The wealthier client might reasonably pay more if their affairs are more complex, if they have multiple entities requiring coordination, or if the reputational and regulatory risk of getting things wrong is higher. But you need to articulate that reasoning, not just assume it’s obvious.
Clients who test your value proposition
Every firm has them. Clients where the maths is uncomfortable.
Perhaps they came to you years ago with a substantial pension but have since drawn it down significantly. Their pot is now £80,000, you’re charging £800 a year, and you’re providing the same annual review you’d give someone with £800,000.
Or the opposite: a client whose investments have grown from £200,000 to £600,000 over a decade. Your fee has tripled while your service has stayed essentially the same.
The FCA expects you to have considered these scenarios. Not just acknowledged them—actively thought about whether those clients are receiving fair value and what, if anything, you should do about it.
For many firms, this is where a hard look at business model becomes necessary. Can you continue serving all clients profitably and fairly under a single service model? Or do you need different propositions for different segments?
How to actually evidence value (not just claim it)
This is where most assessments fall down. Firms make assertions about the value they deliver without evidence to support them.
The FCA’s 2023 review of fair value frameworks found some firms planned to rely on “high-level or unevidenced arguments that their business models or ethos are inherently fair value.” That’s not going to fly.
If you claim clients value your annual review process, show the results of your client satisfaction survey. If you say your investment selection adds value, demonstrate it with performance data against relevant benchmarks. If you argue your service prevents costly mistakes, document the times you’ve talked clients out of panic-selling or chasing unsuitable investments.
Useful evidence includes:
- Client feedback and satisfaction scores
- Complaints data and how you’ve responded
- Service delivery metrics—reviews completed, response times, client contact frequency
- Outcome data—tax savings achieved, costly mistakes avoided, goals reached
- Fee comparisons against industry benchmarks
The FCA acknowledges that smaller firms won’t apply the same resources as larger ones. A sole practitioner isn’t expected to commission extensive market research. But you do need proportionate evidence. At minimum, that means tracking what you actually do for clients and gathering feedback on whether they value it.
Ongoing service problem
The FCA’s February 2025 review of ongoing advice services brought fair value sharply into focus. The regulator asked 22 major advice firms whether they were actually delivering the services clients were paying for.
The headline results were reassuring: 83% of clients received their suitability reviews. But 15% either declined or didn’t respond to review offers, and in 2% of cases, firms hadn’t even tried to deliver the service.
That 2% is the problem. If clients are paying for annual reviews they’re not receiving, that’s a clear fair value failure—and potentially a redress issue. The FCA expects firms to review their practices back to 2018 and remediate where necessary.
But there’s a subtler point here. If 15% of your clients aren’t engaging with the service they’re paying for, is that service actually delivering value for them? Should you be continuing to charge them? Or should you have a policy for disengaging clients who don’t participate?
Good practice, according to the FCA, includes policies to stop collecting fees where a client hasn’t engaged for an extended period. Not just for compliance reasons—because continuing to charge for a service someone doesn’t use is hard to defend as fair value.
Making value visible to clients
Here’s something that often gets overlooked: if clients don’t understand the value they receive, you have a Consumer Duty problem regardless of whether you’re actually delivering it.
The regulator’s consumer understanding outcome intersects directly with fair value. Clients need enough information to make informed decisions about whether your service is worth what it costs.
After every review meeting, summarise what was covered and any actions taken. When you rebalance a portfolio, explain what you did and why. When tax-year-end planning saves a client £2,000, make sure they know about it. These touchpoints don’t just reinforce value—they create the evidence trail you need for your fair value assessment.
Many firms do excellent work that remains largely invisible to clients. They monitor portfolios, research funds, stay current on legislation, and handle administrative hassles behind the scenes. But if clients only hear from you once a year for their review, they might reasonably wonder what their ongoing fee actually pays for.
Rethinking service delivery for different clients
Here’s a reality most advice firms grapple with: not all clients need—or want—the same level of service.
A 35-year-old accumulating into a workplace pension and ISA has different needs than a 65-year-old navigating retirement income complexities. A client with £500,000 across multiple pensions, ISAs, and investment bonds requires more coordination than someone with a single pot on a modern platform.
Yet many firms offer essentially one service at one price (adjusted for assets). That’s increasingly hard to justify under fair value requirements.
Some firms are responding by developing tiered propositions. Others are exploring how digital and hybrid service models can serve certain client segments more efficiently—and more appropriately.
Consider the client with straightforward needs: a workplace pension, perhaps an ISA, accumulating steadily toward retirement in 25 years. They don’t need (or want) frequent meetings. They’re comfortable with technology. Their financial situation doesn’t change dramatically year to year.
For this client, a traditional high-touch advice service might actually be more than they need—and charging full ongoing fees for it becomes hard to justify. But simply “exiting” these clients feels wrong too, especially if they came to you for help originally.
This is exactly where digital advice propositions create options.
Digital dimension of fair value
A well-designed digital proposition lets you serve certain clients more efficiently while maintaining advice quality and compliance. Reviews can be streamlined through automated data gathering. Fact-finds can be completed by clients in their own time. Reports can be generated at the click of a button rather than assembled manually over hours.
That efficiency gain matters for fair value in two ways.
First, it reduces your cost to serve, which means you can potentially charge lower fees while maintaining profitability. A client paying 0.5% for a digitally-enabled service may receive better value than one paying 1% for an inefficient manual process—even if the former involves less adviser facetime.
Second, it creates documentation automatically. Every client interaction through a digital platform is logged. Every review is timestamped. Every recommendation is recorded. When the FCA asks how you evidence service delivery, you have systematic records rather than scattered emails and meeting notes.
JustFA’s platform exemplifies this approach. It combines CRM, back-office, and investment platform in a single system—meaning advisers aren’t re-keying data across multiple platforms or reconciling information manually. Client reviews are scheduled automatically and can be monitored for delays. Reports are generated from templates, ensuring consistency and completeness.
For advisory firms looking to address the fair value challenge systematically, this kind of integrated approach creates real advantages. You can demonstrate exactly what service each client received and when. You can serve more clients without proportionally increasing costs. And you can offer a genuinely modern experience that clients—particularly younger, digital-native ones—increasingly expect.
Building a hybrid model that works
The most successful advice firms aren’t choosing between traditional and digital—they’re combining both.
Their high-net-worth clients with complex needs receive the intensive, relationship-driven service that justifies premium fees. Face-to-face meetings. Coordination with other professionals. Bespoke planning work that genuinely requires senior adviser expertise.
Their clients with simpler needs—often smaller portfolios, straightforward goals, longer time horizons—receive advice through a more efficient digital channel. Still regulated advice. Still overseen by qualified advisers. But delivered in a way that’s sustainable at lower fee levels.
This isn’t about providing “worse” service to some clients. It’s about providing appropriate service to all clients—and being able to evidence fair value for each segment.
The numbers can be compelling. Traditional advice might cost £900 per client review when you factor in all the administration, preparation, meeting time, and follow-up. A digitally-enabled process might reduce that to £300. At the same time, you might reduce the fee from 1% to 0.5%—and still improve your profit margin while delivering demonstrable fair value.
JustFA’s case studies suggest firms can service three times more clients through a digital proposition while maintaining compliance standards. That capacity unlock matters: it means advisers freed from administrative burden can focus on the high-value planning work that clients genuinely need—and that justifies ongoing fees.
Putting it into practice
So where does this leave you?
Start by auditing your current fair value assessment. Is it making specific, evidenced claims about value delivered? Or is it generic assertions that could apply to any advice firm? Does it consider different client segments separately? Does it acknowledge the limitations of percentage-based charging and explain how you address them?
Then look at your service delivery processes. Can you evidence when each client last received a review? Do you track the work done between annual meetings? If a regulator asked for documentation of value delivered to a specific client, could you provide it?
Finally, consider whether your business model is sustainable under genuine fair value scrutiny. If certain client segments are difficult to serve profitably at current fee levels, you have options: raise fees (with clear value justification), reduce service costs through efficiency and technology, or accept that those clients may be better served elsewhere.
The firms that will thrive under Consumer Duty aren’t the ones treating fair value as a compliance box to tick. They’re the ones using it as a lens to genuinely improve how they serve clients—delivering demonstrable value at prices that make sense for both parties.
For many, that means embracing digital and hybrid models that expand capacity, reduce costs, and create the documentation trail that fair value demands. Not instead of traditional advice, but alongside it—matching service model to client need in a way that the regulator can’t argue with.
The FCA has made its expectations clear. Wealth and advice firms will face increasing scrutiny on fair value through 2025 and beyond. The question isn’t whether to take this seriously—it’s whether you’re ready.
CTA: Need help structuring your fair value assessment?
Contact us for our Fair Value Assessment Template—a practical framework you can adapt for your firm.