The FCA’s latest guidance on fair value stresses that firms must demonstrate a meaningful relationship between price and expected customer benefit. It also expects firms to consider different customer groups, including pricing, risk and vulnerability segments, and to test whether customers understand the costs and commitments involved.
This has direct implications for AI use in mortgage and protection advice. Automated tools can help analyse outcomes, complaints, fees, cancellations, arrears and customer feedback at scale. But an AI dashboard that merely describes products or produces generic conclusions will not provide the evidence the regulator expects.
Advice firms using AI should be able to explain the underlying data, segmentation method, limitations, governance and actions taken when risks are identified. In Consumer Duty terms, the goal is not automation for its own sake, but clearer evidence of fair customer outcomes.