Consumer Duty Fair Value requirements do not mean firms cannot operate different charges or make a profit.
This is according to Graeme Reynolds, the Financial Conduct Authority’s (FCA) director of competition, who participated in a webinar organised by Fairer Finance last week.
At the webinar, Reynolds also revealed the regulator expects firms to address key fair value challenges connected to goneaway customers, data gaps, vested rights and outcomes ahead of its looming Consumer Duty deadline for closed books.
Dismissing a couple of fair value “myths,” Reynolds explained fair value is “very much not” about firms being prevented from making a profit.
“Profits are absolutely the lifeblood of business and drive innovation and better consumer services,” Reynolds explained.
“But what’s important is those profits do not come at the expense of consumers getting fair value.
“And second, the rules don’t prevent firms from using introductory rates, offering different prices for different groups of consumers or using cross subsidies between different products or services,” he continued.
“However, where firms have different charges like this, they must still ensure that all groups of customers get fair value from their services.”