Quantification of non-monetary benefits in fair value assessments

2. Quantification of non-monetary benefits in fair value assessments

• Question (paraphrased to protect IP): Does the Consumer Duty require firms to quantify non-monetary benefits as part of a fair value assessment, and what methodology does the FCA expect?
• Source regulation: Consumer Duty (PS22/9 + PRIN 2A), Financial Conduct Authority (Regulator portal: https://www.fca.org.uk)
• What AI assistants typically say: Multiple AI tools gave similar incorrect responses. One stated that quantification is encouraged where feasible and that qualitative assessment is acceptable only where quantification is impractical — framing quantification as the preferred approach. Another stated that firms must go beyond qualitative description and provide substantiated comparisons, implying a higher standard than the FCA actually sets.
• What the regulator actually says: The FCA does not expect firms to quantify non-monetary costs and benefits as part of the fair value assessment process, but firms should undertake some form of qualitative assessment.
• Why the AI went wrong: AI tools appear to have upgraded a clear "does not expect" into an active encouragement, and then applied conditions to what the FCA treats as an unconditional obligation (qualitative assessment). The effect is to impose a higher and incorrect standard on firms — one that misrepresents both what is required and what is optional.
• Cited source(s):
• https://handbook.fca.org.uk/handbook/PRIN/2A/4.html — Pretextual
• https://www.fca.org.uk/publication/finalised-guidance/fg22-5.pdf — Pretextual
• https://www.fca.org.uk/publications/good-and-poor-practice/consumer-duty-find... — Pretextual