On 29 October 2026 the FCA published good and poor practice on fair value in consumer finance. It creates no new rules. It shows how firms are applying the Consumer Duty's price and value outcome in PRIN 2A.4, and where they fall short: assessments that treat the target market as one group, leave out arrears and other contingent charges, miss customers who pay fees again and again, and benchmark on headline prices alone. The better firms set thresholds that trigger action, give customers time to pay before charging, limit repeat or cumulative charges and waive fees for customers in difficulty.
What the FCA published and who it applies to
The publication draws on three pieces of supervisory work. The FCA reviewed fair value assessments from selected firms of different sizes across consumer credit lending, debt advice, credit reference agencies, and debt purchasing, collection and administration. It ran a focused review of fees and charges at firms offering unsecured loans, credit cards, retail revolving credit, retail finance and high-cost credit. It also looked at consumer hire and third-party ownership agreements for home energy equipment, such as boilers, solar panels and heat pumps.
The FCA says the examples "will be of interest to consumer finance firms subject to the Consumer Duty". It also says they "do not create new requirements or prescribe specific actions", and that "proportionality does not mean a lower standard".
The scale of charging explains the focus. The FCA's Product Sales Data for the four quarters from Q3 2025 to Q2 2026 showed penalty charges on around 3% of consumer credit agreements, almost 28 million individual charges. Late repayment charges were the most common.
Where BNPL lenders fit
The publication does not name buy now pay later, but its findings bear directly on BNPL lenders. Interest-free BNPL, called deferred payment credit in the rules, has been regulated since 15 July 2026, and in PS26/1 the FCA told lenders preparing for the temporary permissions regime to be fully compliant with the Consumer Duty from that date, including demonstrating fair value. PS26/1 did not cap late fees. It added CONC 7.20, which sets what a lender must tell a borrower after a missed payment, and pointed lenders to the wider arrears rules in CONC 7.
Because interest-free BNPL has no interest or charge for the credit itself, a missed payment fee can be the only cost a customer pays. The findings on missed payment charges, reminders and repeat fees therefore apply directly. Our guide to BNPL FCA authorisation for 2026 and 2027 covers the wider rule set.
The rules behind the findings: PRIN 2A.4
PRIN 2A.4 is the Consumer Duty's price and value outcome. It applies to the firm that manufactures the product and, with its own duties, to firms that distribute it.
| Provision | What it requires |
|---|---|
| PRIN 2A.4.1R | Value is the relationship between the amount paid and the benefits the customer can reasonably expect. Fair value means the amount paid is reasonable relative to the benefits |
| PRIN 2A.4.2R | Ensure products provide fair value to customers in the target market, and review the assessment regularly |
| PRIN 2A.4.3R | Carry out an assessment before a product, or a significant change to it, is marketed or distributed |
| PRIN 2A.4.8R | Consider the product's benefits and quality, its limitations, the expected total price including contingent charges such as charges for falling into arrears, non-financial costs, and characteristics of vulnerability |
| PRIN 2A.4.9G | A firm may consider its own costs, market rates for comparable products, and whether others offer similar or better benefits for significantly less |
| PRIN 2A.4.11G | Consider whether customers with characteristics of vulnerability are less likely to get fair value, and whether each customer group gets fair value, including under differential pricing |
| PRIN 2A.4.20R | Do not rely on customers' own view of value in place of the firm's assessment |
| PRIN 2A.4.25R | Where a product no longer gives fair value, mitigate and where appropriate remediate harm to existing customers and prevent harm to new ones |
Our earlier guide on Consumer Duty value assessment for consumer credit firms explains the framework. This article covers what the FCA has now found in practice.
Good and poor practice: the seven areas
The FCA groups its findings into seven areas.
| Area | Good practice the FCA saw | Poor practice the FCA saw |
|---|---|---|
| Structure and evidence | A holistic, proportionate approach, value mapped across the customer journey, evidence and MI brought together under governance | No documented approach, narrative assertions, evidence scattered across documents, outdated information |
| Total price | Financial and non-financial costs considered, price compared with expected benefits, benefits quantified | Fees considered separately, contingent and arrears charges left out, assessments not reflecting current charges |
| Customer groups | Segmentation by risk, usage, channel and vulnerability, value tested across pricing groups | Target market treated as one group, limited analysis of vulnerable customers, repeat fee impacts not compared |
| Monitoring | Defined indicators, thresholds or triggers for investigation and escalation, outcomes compared across groups | No framework, portfolio-level monitoring only, unclear processes for acting on findings |
| Benchmarking | Used as one source of evidence, comparators chosen carefully, price differences explained | Comparators not explained, higher prices not explained, comparisons on headline prices only |
| Communications | Fees shown clearly and prominently before the customer decides, understanding tested | Late or unclear fee disclosure, fee information fragmented, long-term commitments not prominent |
| Controls | Time to pay and reminders before a missed payment charge, limits on fees in a defined period, waivers in difficulty | Repeat fee payers not identified, cumulative fee impact not assessed, no evidence controls work |
Fees and charges: the controls that worked
The controls section is the most practical part of the publication. The FCA saw firms that:
- Gave customers time to make a payment and sent reminders before applying a missed payment charge
- Limited the number of fees that could be charged within a defined period
- Waived, refunded or stopped applying fees where customers were in financial difficulty, engaging in forbearance discussions or showing characteristics of vulnerability
- Regularly waived additional fees while customers were receiving forbearance support
The FCA adds a point that matters for any board report: "The existence of a control does not, by itself, demonstrate that it is working as intended or reducing the risk of harm." A firm should be able to show the control's design, how often it triggers and what happened to the customers it caught.
The publication also restates CONC 7.7.5R: a firm must not impose charges on customers in default or arrears difficulties unless they are no higher than necessary to cover its reasonable costs. Meeting the cost rule does not on its own show fair value: the charge still counts in the expected total price under PRIN 2A.4.8R. Our guide to CONC affordability, forbearance and redress covers the arrears rules in depth.
Customer groups and repeat fee payers
The most common weakness was treating the target market as a single group. In the fees and charges review, many firms did not consider which customer groups were more likely to incur repeat fees, so they could not see charging patterns that might change the fair value conclusion for those groups.
The FCA gives examples of what works. One credit card provider used an outcomes dashboard to identify repeat or consecutive fee payers. One firm contacted customers who were paying more in fees than they received in cashback. One credit card provider put a value on its cashback and foreign exchange savings so it could compare benefits with costs. By contrast, one pawnbroking firm could not show how it assessed customers who used the service repeatedly.
For lenders and BNPL firms, a practical starting point is a segmentation that separates customers who never pay a fee from those who pay one and those who pay several, cut by vulnerability and channel.
Monitoring, MI and benchmarking
Where monitoring was weak, assessments did not identify the outcomes to be monitored, the metrics and data sources, ownership and governance, frequency, quality assurance, or the thresholds for investigation, escalation or intervention. The FCA also criticised complaints analysis that recorded only the primary reason for a complaint, or excluded complaints that were not upheld. As it puts it, data collection alone does not demonstrate good outcomes.
Benchmarking is allowed under PRIN 2A.4.9G, and the FCA calls benchmarking and outlier analysis useful context. It does not replace the firm's own assessment. Comparators should be justified, higher prices explained, and comparisons should reflect product features rather than headline price alone.
The FCA said it will keep monitoring fair value and fees through supervision and firms' Product Sales Data and CCR009 returns. Our guide to CCR009 and Product Sales Data reporting explains what those returns show the FCA.
A fair value assessment checklist
| Step | What to evidence | Rule |
|---|---|---|
| Scope | Every product and significant change, assessed before launch | PRIN 2A.4.3R |
| Total price | All fees, including late, default and arrears charges, at current levels | PRIN 2A.4.8R(3) |
| Non-financial costs | Time, effort and personal data asked of customers | PRIN 2A.4.8R(3)(d) |
| Benefits | Benefits quantified where possible and compared with total cost | PRIN 2A.4.1R |
| Customer groups | Results by segment, by fee frequency and for customers with characteristics of vulnerability | PRIN 2A.4.8R(4) and 2A.4.11G |
| Repeat fees | Repeat and cumulative fee payers identified and tracked | PRIN 2A.4.11G |
| Monitoring | Named metrics, data sources, owners, frequency, quality assurance and thresholds | PRIN 2A.4.24R and 2A.9.8R |
| Benchmarks | Comparators justified, price differences explained | PRIN 2A.4.9G |
| Communications | Fees disclosed clearly before the decision, understanding tested | PRIN 2A.5 |
| Controls | Grace periods, reminders, repeat fee limits and waivers, with evidence they work | PRIN 2A.2.8R |
| Action | A defined route to change the product and remediate where value fails | PRIN 2A.4.25R |
| Governance | A review cycle suited to the product, with sign-off recorded | PRIN 2A.4.2R(2) |
What to do now
Read the publication against your latest fair value assessment and record a gap analysis for the board. Add the arrears and other contingent charges at current levels. Split results by fee frequency and vulnerability. Set thresholds that trigger a review, and test whether each fee control is working. Firms preparing a refreshed assessment or Consumer Duty board report can draw on our Consumer Duty service and our consumer credit sector page.
Frequently asked questions
No. The FCA says its examples do not create new requirements or prescribe specific actions. They show how firms are meeting the existing price and value outcome in PRIN 2A.4 and where they fall short.
It is aimed at consumer finance firms subject to the Consumer Duty. BNPL lenders have been regulated since 15 July 2026 and PS26/1 told them to be fully compliant with the Duty from that date, including demonstrating fair value.
Under PRIN 2A.4.8R: the product's benefits and quality, its limitations, the expected total price including contingent charges such as arrears charges, any non-financial costs, and characteristics of vulnerability in the target market.
Yes, as one source of evidence under PRIN 2A.4.9G. The FCA says benchmarking does not replace the firm's own assessment, comparators should be justified, and comparisons should not rest on headline prices alone.
An assessment is needed before a product or a significant change is marketed. After that, PRIN 2A.4.2R requires regular review appropriate to the nature and duration of the product, and PRIN 2A.4.24R requires review throughout the product's life.
Giving time to pay and sending reminders before a missed payment charge, limiting the number of fees in a defined period, and waiving or refunding fees for customers in financial difficulty, in forbearance or with characteristics of vulnerability.
Yes, within limits. CONC 7.7.5R says charges on customers in default or arrears difficulties must be no higher than necessary to cover the firm's reasonable costs. The total price, including those fees, must also give fair value.
References
- FCA: Fair value in consumer finance, good and poor practice (29 October 2026)
- FCA Handbook: PRIN 2A.4, Consumer Duty price and value outcome
- FCA PS22/9: A new Consumer Duty
- FCA PS26/1: Regulation of Deferred Payment Credit
- FCA Handbook: CONC 7, arrears, default and recovery
About Regulatory Counsel
Regulatory Counsel reviews fair value assessments, fee controls and Consumer Duty evidence for lenders, BNPL firms and other consumer credit businesses, and helps boards act on FCA findings. We work from New York and London across 65+ jurisdictions, with 200+ licence and registration engagements. Every enquiry is answered the same business day with a written proposal: contact us.
This article is general information as at 30 October 2026 and is not legal advice.
Definitive guides on this topic
The permanent reference pages this article relates to.