The FCA's Review of Fair Value Frameworks
The Financial Conduct Authority (FCA) has published a blog post on its review of fair value frameworks. The review found that many firms had good practices in place, but there were also some areas where firms could improve.
The FCA's Consumer Duty requires firms to ensure that their communications are clear, fair, and not misleading. This includes ensuring that the price of products and services is fair. Fair value is the price that a willing buyer would pay to a willing seller in an arm's-length transaction.
The FCA's review found that many firms had good practices in place for setting fair value. These practices included:
Using robust methodologies
Considering a wide range of factors
Being transparent about the methodology used
However, the review also found that some firms could improve their fair value frameworks. These firms could improve by:
Being more transparent about the assumptions used in their methodologies
Considering the impact of behavioral biases
Being more responsive to feedback from consumers
The FCA's review is a valuable resource for firms that are setting fair value. The review provides guidance on good practices and identifies areas where firms could improve.
The FCA's review of fair value frameworks is a valuable resource for firms that are setting fair value. The review provides guidance on good practices and identifies areas where firms could improve. By following the guidance in the review, firms can help to ensure that their communications are clear, fair, and not misleading.
