Good Value?

A suggested framework for financial services firms to assess the value for money of their products

Against a background of rising regulatory scrutiny of value for money, this report sets out a comprehensive economic framework that firms across all financial services sectors can use to assess and demonstrate the value for money of their products and services.

Firms are facing increasing regulatory scrutiny relating to the “value for money” of their products and services. As a result of this scrutiny, firms will increasingly be asked to justify the pricing and wider value of their products and services to the regulator.

In the UK, the FCA has already undertaken a number of market studies across the asset management and general insurance sectors, looking at the pricing and value of these markets.

In the coming years the FCA is likely to turn its attention to the value for money of a growing number of financial services markets, with a particular focus on mass market retail products.

Firms will consequently need to prepare to justify the pricing and value that their products provide.

“Value” can first appear to be a nebulous and debateable concept, and regulators will, understandably, be unwilling to provide firms with template answers for what good or fair value looks like.

However, this report illustrates and explores an economic framework that boards and senior managers can use to assess and demonstrate the value for money of their products and services.

The report sets out the core principles underpinning this framework and explains how it can be used to think about different aspects of value, as well as used as an effective tool with which to construct management information and board and risk governance reporting. The report also explores a number of practical questions firms across different financial sectors can put to themselves to ensure they are considering an appropriate range of value perspectives.

About the Centre for Regulatory Strategy, EMEA

The Deloitte Centre for Regulatory Strategy is a powerful resource of information and insight, designed to assist financial institutions manage the complexity and convergence of rapidly increasing new regulation.

With regional hubs in the AmericasAsia Pacific and EMEA, the Centre combines the strength of Deloitte’s regional and international network of experienced risk, regulatory, and industry professionals – including a deep roster of former regulators, industry specialists, and business advisers – with a rich understanding of the impact of regulations on business models and strategy.

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