Fair value at file level: justifying a recommendation against alternatives
What the price and value outcome asks of a recommendation
The price and value outcome (PRIN 2A.4) is about whether the price the client pays is justified by the value they receive. At file level, that is a value-for-money paragraph that names the cost and the alternatives.
The gap most files have is not the assessment — it is the documentation. A recommendation that names the cost and the alternatives, and explains why this product at this cost for this client, is the evidence the outcome asks for. The FCA's Consumer Duty pages set out the price and value outcome in full.
The value-for-money paragraph, component by component
The paragraph does its job in four components. Each answers one question a reviewer will ask of the file.
The cost in pounds
total, initial and ongoing, not just a percentage
The alternatives named
the realistic alternatives considered
The choice explained
why this product, at this cost, for this client
The ongoing value
what the client will keep receiving, tied to the service record
The rubric checks this in two places: cost disclosure (are the charges and their impact on returns shown?) and product alternatives (are the alternatives named and the rejection explained?). A file that clears both answers the fair-value question before it is asked.
What the FCA's fair-value framework review found
The fair-value framework review keeps finding that assessments exist but do not make it into the file — the value justification stays in the adviser's head or the pricing model. The paragraph is the fix for exactly that gap.
The review and its companion material sit in the Consumer Duty publications library, alongside the good and poor-practice examples the FCA adds as it keeps fair value in scope for firms.
Worked example: the recommendation rewritten
One recommendation, two versions. Compare how it read before and after (anonymised, illustrative).
Before
“Platform A recommended for its range of funds. Ongoing charge 0.75%.” — no cost in pounds, no comparison, and no reason for this choice.
After
“Total cost in pounds, initial and ongoing. Platforms B and C named with comparable costs, and the reason A was chosen over each. Reference to the dated service log that evidences the ongoing value.”
Common mistakes in the recommendation
- Justified by the platform's range alone. A product chosen for its funds with no cost line, no comparison, and no reason answers none of the fair-value questions.
- Alternatives named without a comparison. Listing other platforms without costs or a rejection reason is decoration, not evidence.
- A value paragraph written once and never updated. Ongoing value is evidenced by the service record, not by the original report.
- Client understanding assumed. The paragraph has to show how the cost lands in this client's circumstances, not just state that the product is suitable.
The checklist, as a reviewer reads it
| Element | What the file must show | Why |
|---|---|---|
| Cost in pounds | Total, initial and ongoing, not just a percentage | A reviewer can see the price |
| Alternatives named | The realistic alternatives, with comparable costs | The choice can be checked |
| Choice explained | Why this product, at this cost, for this client | The judgment is visible |
| Understanding shown | How the cost and features land for this client | The client's circumstances are reflected |
| Ongoing value logged | What the client keeps receiving, tied to the service record | Fair value stays evidenced after the report |
Related reads
The paragraph sits inside the fair value silo — start at the fair value hub for the whole picture, see the price-and-value rule in detail for the checks it must clear, and the ongoing-charge log for the record that keeps the value evidenced beyond the report.
Frequently asked questions
How long should the value-for-money paragraph be?
Long enough to name the cost, the alternatives, and the reason for the choice — usually a short paragraph. Its purpose is to let a cold reader see the judgment, not to describe the research behind it.
Does every recommendation need alternatives?
It needs the realistic alternatives for this client named with comparable figures and the rejection explained. The outcome asks that the choice is justified, and alternatives are the practical way to show it.
Where does the paragraph belong in the file?
Inside the suitability report, next to the recommendation, and restated in the annual review where the ongoing charge is justified. Both places should reference the same service record.
Your next step
Rewrite the next recommendation you file: cost in pounds, alternatives named and rejected in writing, the reason for this choice, and a reference to the service record. Proven Duty's file review checks these elements and flags what is missing. Start with a free trial or see pricing.