Although the Financial Conduct Authority (FCA) opened its consultation on 'fair value for money' in defined contribution pensions in June 2020, its update today got me thinking about the proposed obligation on firms to deliver 'fair value' under the Consumer Duty.

One could follow two lines of thought here. The first is that a general duty to deliver 'fair value' is inappropriate as what is or is not 'fair value' is sector, market, product/service and client specific - as is demonstrated by the trouble the FCA and The Pensions Regulator go to identify what is 'good value' in pension scheme provision. The second is that the FCA has available to it responses to consultations and qualitative and quantitative data which it can and should use to inform itself and the market as to how it will interpret and apply the Consumer Duty requirement.

Both lines of thought, however, end up in the same place: more certainty is required from the FCA. Having sector, market, product/service and client specific certainty would be ideal, although one cannot help but think impractical, whereas having an 'informed, consistent but general' certainty would be more achievable but perhaps of less practical use. Whichever it is it would be an improvement on nothing at all.

On a related topic, one should remember that there have been previous attempts to impose obligations on firms to provide clients and customers with data to draw their own conclusions on the quality of the product/service they are receiving and the ability of their product/service provider to demonstrate it: RTS 27 (the MiFID2 'best execution' reports) for example. This did not go the way politicians or regulators thought it would and RTS 27 is suspended currently.

Of course I do not say that because RTS 27 reports should be easier to collate and understand (given they are based on quantitative data) than 'fair value' or 'value for money' metrics (which will lean heavily on qualitative data) but have not worked, then a 'fair value' obligation is doomed already. One cannot let it pass however that even the European Securities and Markets Authority admitted that hardly anyone read or relied on the RTS 27 reports.