Consumer investments department head says it should not be a ‘race to the bottom’

Advice firms cannot rely on charging the lowest fees to meet fair value requirements, Financial Conduct Authority (FCA) head of department for consumer investments Kate Tuckley has warned.

Speaking at the CISI Financial Planning Conference 2025 today (3 October), Tuckley told delegates that fair value under Consumer Duty cannot be reduced to simply charging the lowest fees.

She explained that too many firms risk misinterpreting the Duty by focusing narrowly on costs rather than the overall service they provide.

“Our CEO Nikhil Rathi has been very clear, it is not about price, it is about value,” she said. “You won’t be offering fair value in our view if your customers don’t understand the product you are offering. It’s not a race to the bottom. What we want is that holistic view: what are you offering?”

Tuckley said the regulator has already seen positive signs, with complaints on products falling from 39% to 26% since the Duty was introduced. Some firms have also reviewed and adapted pricing structures to improve fairness, she noted.

Tuckley reminded delegates that the regulator is changing its supervisory approach, moving away from frequent “Dear CEO” letters and instead engaging in more two-way conversations with firms. She also confirmed that the FCA would not bring in bespoke artificial intelligence (AI) regulation but expected firms to monitor the consumer impact of new technologies.

“The key is whether clients truly understand the service and benefits they are receiving,” she said.

Speaking on a panel with Tuckley, Compliance and Solutions managing director Mel Holman echoed Tuckley’s point on fair value, warning that many advisers still struggle to demonstrate the value of their services.

“Firms say, ‘I know I’m giving my clients value, I’m not getting any complaints,’ and I tell them, how can you prove that to me?” she said.

Holman argued that smaller advice firms in particular need more FCA examples of good and bad practice to guide their approach, but emphasised that income planning, reinvestment in technology, and clear client targeting are essential to evidencing value.

The FCA recently said it was planning to amend its Consumer Duty rules to “remove disproportionate burdens from wholesale firms” and give them confidence to “act proportionately”. In a letter addressed to chancellor Rachel Reeves, Rathi said the regulator has “listened carefully” to the feedback it has received, setting out a four-point action plan to address concerns around when and how the Duty applies during business activities.