Since the introduction of the FCA’s Consumer Duty in 2023, financial firms have been required to demonstrate that their products and services deliver fair value to clients. By now, nearly three years on, the phrase appears regularly in suitability reports, platform reviews and compliance documents.
Consumer Duty: A Shift in Emphasis
The Consumer Duty was designed to raise standards across financial services. It requires firms to:
- Act to deliver good outcomes for retail clients
- Avoid foreseeable harm
- Enable clients to pursue their financial objectives
- Demonstrate that charges represent fair value
It is not merely about avoiding misconduct. It is about proactively proving that the structure, cost and ongoing management of a portfolio are justified.
“Fair value” sits at the centre of this framework.
Fair Value Is Not the Same as “Cheap”
A common misconception is that fair value means low cost.
It does not.
A product can be inexpensive but poorly constructed. Equally, a higher-cost solution can represent strong value if it delivers appropriate service, risk management and long-term outcomes.
Under Consumer Duty, firms must assess:
- The total cost of the product or service
- The benefits it is designed to provide
- The quality of service attached
- Whether it meets the needs of its target market
Value is therefore assessed in context — not isolation.
How This Applies to Investment Portfolios
When you invest through GSI, there are typically three layers of cost:
- Adviser charge
- Platform charge
- Underlying fund costs
Under Consumer Duty, each layer must be assessed individually and collectively.
We ask:
- Is the platform appropriate for the client’s needs?
- Are fund charges justified relative to their strategy and delivery?
- Is the overall structure proportionate to the complexity of the service provided?
It is not enough to select investments that perform well. The entire delivery framework must stand up to scrutiny.
Target Market Matters
Another key element of fair value is the concept of target market.
Every portfolio, fund or strategy must have a clearly defined audience. For example:
- A cautious income portfolio is not appropriate for a high-growth objective.
- A complex alternative strategy is not suitable for clients requiring liquidity.
At GSI, risk profiling, capacity-for-loss assessment and long-term planning discussions ensure that clients are placed into portfolios aligned with their objectives and tolerance for volatility.
Fair value is impossible without suitability.
Ongoing Monitoring — Not Just a One-Off Exercise
Consumer Duty requires that value assessments are ongoing.
Markets change. Costs evolve. Fund managers alter mandates. Platforms adjust fee structures.
Our investment committee conducts regular reviews of:
- Fund performance versus objectives
- Charges relative to peer groups
- Structural or operational changes
- Continued suitability for the intended target market
If something no longer meets our standards — either in cost efficiency or quality — it is reviewed and, where necessary, replaced.
Nothing remains in a portfolio simply because it was there last year.
Transparency and Clarity
Another pillar of Consumer Duty is communication.
Clients should understand:
- What they are paying
- What they are receiving
- How their portfolio is structured
- What risks are involved
Annual reviews, suitability reports and clear fee disclosures are not compliance paperwork. They are part of ensuring clients are empowered to make informed decisions. Transparency is itself a component of fair value.
How GSI Demonstrates Fair Value
In practice, this means:
- Regular cost benchmarking against comparable solutions
- Institutional share classes where available to reduce fund costs
- Ongoing platform due diligence
- Clear documentation of suitability and objectives
- Continuous oversight by the investment committee
It also means challenging ourselves.
Consumer Duty is not about proving we are compliant once. It is about consistently asking: Is this still the right solution for this client, at this cost, in this environment?
Why This Matters More in 2026
With inflation moderating and interest rates gradually easing, investors are again focusing on real returns — what remains after costs and tax. In a lower-return environment, fees matter even more. Fair value is therefore not just a regulatory requirement. It is central to long-term compounding.
A difference of 0.5% per annum in costs, compounded over twenty years, can materially affect outcomes. Consumer Duty simply formalises what good advisers should already have been doing: scrutinising value continuously.
Final Thought: Professionalism, Not Paperwork
The best outcome of Consumer Duty is not additional documentation — it is higher standards. At GSI, fair value is not viewed as a compliance obligation. It is part of our responsibility as stewards of your capital.
Performance matters.
Planning matters.
Costs matter.
Clarity matters.
Fair value sits at the intersection of all four.
If you would like to review the cost structure of your portfolio or understand how value is assessed in your specific circumstances, your GSI adviser will be pleased to discuss it with you.
Disclaimer
The content of the GSI Journal is for information only and does not constitute personalised financial advice. Investment values can fall as well as rise. Please speak to a regulated financial adviser before making financial decisions based on your individual circumstances.
