The Financial Conduct Authority is expected to "ratchet up" its requirements on price and value in the wake of the consumer duty.
Alex Green, regulatory partner at Macfarlanes Financial Services, said firms should expect greater emphasis on price in the months and years ahead, and a greater administrative burden as a result.
The FCA has repeatedly said it is not a price regulator and would not prescribe what firms can or cannot charge but Green said the consumer duty's value rules were de facto price regulation.
"If there was any concept that we do not have a price regulator in the UK so far as retail products and services are concerned, that still existed, I think it is fair to say that is firmly wrong because the consumer duty brings in price and value rules," she said at a roundtable this morning (July 18).
Fair value regulation is not new, asset managers already have to assess value for money provided by their funds every year.
But Green said: "I do think the consumer duty does deliver something new in the price and value outcome. And looking at whether the pricing is fair and delivers good outcomes for customers is something which is new in many sectors."
She added: "I do wonder whether firms in some sectors in their implementation projects have taken on board the extent of the work required here. Certainly under the asset management market study (and for the asset management sector which already has rules on fair value), I think it was a bit of a learning process for firms and I would argue for the FCA in terms of what should be required.
"I suspect as the rules land at the end of this month, over the months and years there will be a ratcheting up of those price and value requirements and the FCA's expectations will be more clearly laid out and firms will have more work to do under those obligations."
The FCA maintained it was not setting prices, adding the consumer duty would not have this effect.
A spokesperson said: "Fair value is about more than just price. The consumer duty aims to tackle factors that can result in products or services which are unfair or poor value, such as unsuitable features that can lead to foreseeable harm or frustrate the customer’s use of the product or service, or poor communications and consumer support.
"The specific focus of the value outcome rules is on ensuring the price the customer pays for a product or service is reasonable compared to the overall benefits. Our intention is not to set prices and our rules do not have this effect."
Adviser trade body Pimfa also does not think the consumer duty's fair value requirement should be conflated with price regulation, though it did think it could influence some decisions around pricing.
