Does an IFA firm need to do a fair value assessment on its own ongoing fee?

Yes. The Consumer Duty's price-and-value outcome covers your own ongoing-service fee, not just product charges. Most firms get this part wrong by assessing only the products on their panel. Your annual board report should include a documented FVA on the firm's own services, by client segment.

How often does a fair value assessment have to be refreshed?

At least annually, and immediately on material changes — to the product itself, to its target market, to the firm's service, or to competing alternatives. Quarterly internal review is a sensible default for ongoing-service fees; annual is fine for products on a stable panel.

What evidence does the FCA look for in a fair value assessment?

The total cost of ownership for the consumer (your fee plus product OCFs plus platform charges), the value delivered (specific service items, observed utilisation, outcomes data), benchmarking against comparable alternatives, and a written conclusion that the value exceeds the cost for the defined target market.

How do you handle clients paying ongoing fees who don't engage with the service?

The case-level analysis the FCA expects is "non-utilisation" — clients paying for ongoing service who haven't taken the reviews, used the cashflow tool, or had a meaningful adviser interaction in the period. The firm needs a process: identify the cohort, contact them, document the response, and either re-engage them or move them to a lower-cost service.

Is a fair value assessment template available from the FCA?

No — the FCA has been explicit that it won't prescribe a template, because the assessment needs to be proportionate to the firm and its products. The trade bodies (PIMFA, PFS) and several consultancies publish templates that have been widely adopted; using one of those, adapted, is fine.

Consumer Duty fair value assessment template — UK IFA worked example

A defensible fair value assessment under the Consumer Duty's price-and-value outcome answers three questions for each thing the consumer pays for: what does it actually cost them all-in, what specifically do they get in return, and is that value reasonable compared with the alternatives. For an IFA firm that means running the assessment on the products on the panel and on the firm's own ongoing service — the part most firms forget. This piece walks through a template that works, a worked example for a £500,000 client on a 0.75% ongoing fee, and the case-level discipline the FCA is asking firms to demonstrate.

The fair value assessment is the most misunderstood part of the Consumer Duty. Most IFA firms read it as "are the products on our panel reasonably priced" and run an OCF analysis on each one. That answers a small part of the question. The bigger part — and the part the FCA has been pressing on in the year-2 reviews — is whether the firm's own ongoing-service fee represents fair value for the client paying it.

Both assessments need doing. This piece is the practical template.

What "fair value" actually means in the rules

The price-and-value outcome doesn't ask whether a product is cheap. It asks whether the price the consumer pays is reasonable relative to the benefits they receive. A more expensive product can represent fair value if the benefits are commensurate. A cheap product can fail fair value if the benefits don't materialise — for example, a low-cost passive fund with a tracking error so wide it loses the cost advantage.

The assessment is segment-level, not consumer-level. You assess fair value for the target market the product or service is designed for. Individual clients then sit inside (or outside) that target market.

The template — five sections per assessment

1. What is being assessed

Name the product or service. Define the target market by reference to the segments the firm has agreed. For ongoing service this is typically segmented by AUM band ("clients with £250k–£750k under management on the firm's standard ongoing review service") or by service tier ("Premium service clients").

2. Total cost to the consumer

For a fund on the panel: OCF, transaction costs, platform charge if applicable, any adviser fee specific to that fund.

For the firm's ongoing service: the ongoing-service fee (percentage of AUM or fixed fee), any transaction-based charges, the bundled platform charge if the firm uses a single platform.

Compute total cost of ownership in pounds for a representative client in the target market. Don't aggregate it as a percentage. The number that matters to the consumer is the number that comes out of their pot each year.

3. Value delivered

List, specifically, what the consumer gets. For a fund: the investment outcome (income, growth, capital preservation), the management discipline, the risk framework. For ongoing service: the annual review, the cashflow update, the suitability re-assessment, the response to client-initiated queries, the platform access, the tax-year-end checks. Tie each to a deliverable that can be evidenced from the firm's records.

Then collect utilisation data. Did the client actually take the reviews? Did they engage with the suitability re-assessment? If a client paying for an ongoing review service has not taken a review in 24 months, that's the case the fair value assessment needs to address.

4. Benchmarking

What comparable alternatives exist and what do they cost? For products on the panel, this is usually a published OCF comparison against peers in the same Investment Association sector. For ongoing-service fees, it's a benchmark against publicly available IFA fee data (NextWealth, the lang cat, Citywire have all published comparable surveys) and a check against vertically-integrated alternatives (DFM-led MPS at consolidated fee, etc.).

5. Conclusion

A written conclusion that the value delivered exceeds the cost for the defined target market — or doesn't, in which case the firm has actions to take (renegotiate, replace the product, restructure the service, communicate a change to clients). The conclusion is what the board approves.

Worked example — £500,000 client, 0.75% ongoing fee

Imagine a client in the £250k–£750k AUM segment paying a 0.75% ongoing-service fee on a £500,000 portfolio. The numbers, all-in:

Ongoing-service fee: £3,750 a year
Platform charge: 0.25% — £1,250
Weighted average OCF on a balanced portfolio: 0.55% — £2,750
Transaction costs: about 0.10% — £500

Total cost: £8,250 a year, or 1.65% of the portfolio. That is the number the client is paying — not 0.75%.

What does the client get in return? At a typical mid-sized IFA firm with a defined Premium-segment service the deliverable list is around six to eight items: an annual face-to-face review, a mid-year telephone review, a cashflow refresh, a tax-year-end check, ad-hoc adviser access, suitability re-assessment, ISA-and-pension-allowance maximisation, and a financial-planning report. Utilisation data over the prior twelve months shows which the client actually used.

Benchmarking. NextWealth's published advice-fee research puts the average UK adviser ongoing fee at around 0.67% (67 basis points). The FCA cites 0.8% as the typical figure. The firm's 0.75% sits within that range. The all-in 1.65% sits below the typical 168-bps all-in cost of investing through a UK adviser (NextWealth research) because the firm has chosen platform and fund options on the lower-cost side.

Conclusion. For a client in the defined target market who is actually using the service, the price-to-value relationship is defensible. The firm signs that off, the assessment goes into the board pack, the conclusion is restated in the annual Consumer Duty report. For the same client paying the same fee but not engaging — no reviews taken, no contact in 18 months — the conclusion is different. The firm has to either re-engage them or offer them a non-ongoing alternative.

The case-level analysis the FCA is asking for

The single most important refinement year-2 reviews have surfaced is the "non-utilisation" cohort. Clients paying ongoing fees who haven't received (or taken) the contracted service in the assessment period. The FCA expects firms to identify that cohort, quantify the fee revenue from it, and demonstrate what the firm has done about it.

"Done about it" is allowed to mean a range of things. Contact attempts that the client didn't respond to count, provided they are documented. Moving the client to a transaction-only service counts. Refunding the period's fee counts. What doesn't count is silence.

Closed-book products

Closed products — funds your clients hold that are no longer accepting new business — fall in scope. They are often the worst fair-value picture on the panel because the firm has stopped paying attention to them. The year-2 board report should include a separate assessment for closed-book holdings, and a stated plan for any that fail fair value.

Where Wealth Analytica fits

The fair value assessment is fundamentally a data exercise. You need fee data per client, service-utilisation data per client, portfolio data with fund OCFs and transaction costs, and a way to segment the client base. The reason most fair value assessments take six weeks to compile is that the data lives in five places. Wealth Analyticaconsolidates the lead-to-proposal pipeline so that the data sits in one record per client — fee, service activity, portfolio, outcomes — and the fair value assessment becomes a report you run, not a project.

Common questions

Below is the set of questions we hear most often from IFA partners working through their second-year fair value assessment.

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