Quantification of non-monetary benefits in fair value assessments

5. 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? 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 on this question. One AI stated that quantification is "encouraged where feasible" and qualitative assessment is acceptable only where quantification is impractical. Another stated that firms must "go beyond qualitative description" and provide substantiated comparisons — directly inverting the FCA's position. Both framed the question as though the FCA has a positive expectation of quantification.
• What the regulator actually says: The FCA has stated: "The FCA does not expect firms to quantify non-monetary costs and benefits as part of its fair value assessment process, but firms should undertake some form of qualitative assessment." Qualitative assessment is what is expected; quantification is neither required nor specifically encouraged.
• Why the AI went wrong: Both AI responses converted a permissive non-expectation ("does not expect") into an active regulatory preference or obligation. A Compliance team acting on either AI answer would build a more demanding fair value assessment framework than the FCA requires, consuming disproportionate resource and potentially creating an audit trail that suggests the firm believes quantification is obligatory.
• 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