Your ongoing advice fee belongs in the fair value assessment alongside the fund panel

Most fair value work I see in IFA firms starts with the fund panel. OCFs lined up against sector peers, the platform charge noted, a conclusion that everything sits within a reasonable range. That's a legitimate piece of work. It just isn't all of it.

The handbook text is plain on the point. PRIN 2A.1.4G says the definition of a product for Consumer Duty purposes includes both products and services. An ongoing advice service is a service, so the price and value outcome in PRIN 2A.4 reaches the fee your firm designs, prices and charges itself, and not only the funds you recommend.

What the rule actually asks for

PRIN 2A.4.1R defines value as the relationship between the amount a retail customer pays and the benefits they can reasonably expect to get. A product provides fair value where the amount paid is reasonable relative to those benefits. Cheapness doesn't come into it.

PRIN 2A.4.8R then lists what a value assessment must consider. It's worth reading slowly against your own service proposition:

• the nature of the product, including the benefits and their quality;
• any limitations that are part of it;
• the expected total price, which expressly includes regular charges over its lifetime, such as an annual management charge;
• any characteristics of vulnerability in the target market, and how they affect the likelihood of customers not receiving fair value.

Read that as an adviser and the ongoing fee lands squarely in the third bullet. Our fair value assessment template works through a £500,000 client on a 0.75% ongoing fee, where the all-in annual cost comes to £8,250 once platform, fund and transaction charges are added. That's the figure the client actually experiences. Not 0.75%.

Where the assessment tends to go wrong

Usually in the benefits column. The proposition lists an annual review, a cashflow update, tax-year-end checks and access to the adviser, and those are the benefits a client can reasonably expect. The question the rule forces is whether they were delivered.

A client who has paid an ongoing fee for two years without a review hasn't received the main thing they were paying for, and although their fee is identical to everyone else's in the same band, the value they got from it plainly isn't, which is exactly the gap a segment-level assessment can hide if nobody looks beneath the average.

And there's a rule that closes off the easy answer. PRIN 2A.4.20R says a firm must not rely on individual customers to consider whether they believe the product provides fair value in place of its own assessment. So "nobody has complained" isn't evidence. Nor is a high retention rate on its own. Clients who don't engage often don't leave either.

Closed books need the same care. PRIN 2A.4.21R applies the fair value obligation to closed products as well as new and existing ones. A legacy charging basis, a service tier you no longer sell, an older arrangement kept for a handful of households: all of it sits inside the rule.

What to check on Monday

Honestly, most of this can be started with a client export and a morning.

1. List every client paying an ongoing fee, with the date of their last completed review.
2. Sort by the gap. Use the cut-off your own service proposition promises and look at everyone past it.
3. For each, check the file for documented contact attempts. An offer the client declined is different from no offer at all.
4. Add up the ongoing fee revenue from that group, in pounds. It belongs in the fair value assessment.
5. Look at who is in the group. If older clients or clients with a vulnerability flag are over-represented, PRIN 2A.4.8R(4) makes that part of the assessment too.

What a firm does about the group depends on the firm and on each client's circumstances. Re-engagement, a move to a different service tier with a clear written explanation, or a fee adjustment are all routes firms take. The position that's hard to defend is having the data and not looking at it.

One assessment, two halves

So the panel analysis stays. It answers a real question about the products you recommend. But the ongoing fee is the charge a firm controls most directly, and the one a board can change fastest. If your board pack covers the panel over several pages and the ongoing service in a paragraph, it's worth asking whether that balance reflects where the client's money goes.

The rules quoted are from PRIN 2A.1 and PRIN 2A.4 of the FCA Handbook, as published on the FCA's handbook site. How they apply depends on each firm's structure and proposition, and nothing here is a view on any particular firm's arrangements.