Fair value assessment — quantification of non-monetary benefits

4. Fair value assessment — quantification of non-monetary benefits

• Question (paraphrased to protect IP): Does the Consumer Duty require firms to quantify non-monetary benefits as part of a fair value assessment? 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 of non-monetary benefits is "encouraged where feasible" but that qualitative assessment is acceptable where quantification is impractical. Another stated that firms are expected to go beyond qualitative description and provide substantiated comparisons — framing quantification as an elevated expectation.
• What the regulator actually says: The FCA does not expect firms to quantify non-monetary costs and benefits as part of a fair value assessment. Firms should undertake some form of qualitative assessment — this is what the FCA expects, and quantification is not required.
• Why the AI went wrong: Both AI responses misread a neutral regulatory position (quantification not expected) as a positive expectation (quantification encouraged, or qualitative alone insufficient). One response directly inverted the FCA's guidance by telling firms they must exceed qualitative assessment — the opposite of what the FCA says. A Compliance team designing its fair value assessment methodology on this basis could implement a more burdensome process than required, and measure itself against a standard the FCA has not set.
• 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