The introduction of the Financial Conduct Authority’s (FCA) Consumer Duty marked a paradigm shift in the UK financial landscape, moving away from a "tick-box" compliance culture toward a results-oriented "outcomes" model. As we move through 2026, the focus has intensified on the Price and Value outcome, specifically regarding how mortgage intermediaries justify and report their fee structures. "Fair value" is no longer a subjective concept; it is now a strictly monitored metric where brokers must demonstrate a reasonable relationship between the price paid by the consumer and the quality of the service provided. For mortgage professionals, this means the annual fair value assessment (FVA) has become a cornerstone of their regulatory existence, requiring a level of transparency that was previously unprecedented in the industry.
In 2026, the standard for reporting has matured. The FCA now expects firms to provide granular data on how their fees—including administration, advice, and any third-party commissions—impact the overall value of the mortgage product. This is particularly challenging in a simple distribution chain where unknown costs are few, and the regulator expects high precision.
The Evolution of the Fair Value Assessment (FVA) in 2026
By 2026, the Fair Value Assessment has evolved from a static document into a dynamic, evidence-based report. The FCA has moved beyond asking if a firm has a framework and is now looking for proof of how that framework functions in practice. Mortgage brokers are required to document the rationale behind every fee levied. For instance, if a broker charges a flat fee regardless of the loan size, they must prove that the service provided to a £100,000 borrower is substantially the same as that provided to a £1,000,000 borrower—or justify why the price remains the same. The reporting standards now demand that firms consider "differential pricing" and ensure that specific groups, such as those with characteristics of vulnerability, are not paying a "loyalty penalty" or higher fees for identical services.
This level of scrutiny requires a sophisticated understanding of both the "manufacturer" (the lender) and the "distributor" (the broker) roles. In 2026, lenders are increasingly requesting fee data from brokers to include in their own manufacturer assessments. This inter-dependency means that a broker’s fee transparency directly affects the lender's ability to keep their product on the market. Professionals who have completed a cemap mortgage advisor course are uniquely positioned to understand this "look-through" principle. They understand that their remuneration is part of a larger value chain and that any "hidden" margins or lack of clarity can cause the entire product to be flagged as poor value, leading to immediate regulatory intervention.
Benchmarking and Market Outlier Scrutiny
A significant pillar of the 2026 reporting standards is the use of market benchmarking. The FCA expects mortgage intermediaries to look at competitors of a similar size and offering to check whether their fees are broadly in keeping with the wider market. Being a "market outlier" is not inherently a breach of the Duty, but it does trigger an immediate requirement for an "exception report" within the FVA. If a broker's fees are significantly higher than the industry average, they must be able to point to specific, non-financial benefits that justify the cost—such as extended support hours, specialized advice for complex credit, or unique technological tools that improve the customer journey.
The 2026 standards specifically warn against "window dressing" in these reports. Benchmarking must be based on genuine peer groups, not carefully selected low-cost outliers. This analytical approach to fee setting is a skill that is heavily emphasized in modern training. A cemap mortgage advisor course provides the necessary insight into market structures, allowing advisors to interpret these benchmarks accurately. It teaches them how to balance their own business profit margins with the consumer's right to value, ensuring that the firm remains profitable without crossing the line into "price gouging." In 2026, the regulator’s ability to use data analytics to spot these outliers means that honesty in reporting is the only viable business strategy.
Addressing Cross-Subsidisation and Vulnerability
One of the more nuanced updates to the 2026 Consumer Duty guidance concerns "cross-subsidisation." This occurs when a firm uses higher margins on one service or group of customers to compensate for lower margins (or loss leaders) on another. While not banned, the 2026 reporting standards require firms to be explicit about where this is happening. The danger, from a regulatory perspective, is that vulnerable customers might be the ones inadvertently paying the higher margins. For example, a broker might offer "free" initial consultations but recoup the cost through significantly higher administration fees for those who proceed. Under the 2026 rules, the FVA must prove that this structure does not disadvantage any specific cohort.
Transparency in Customer Communications and Understanding
The "Consumer Understanding" outcome of the Duty is inextricably linked to fair value reporting. In 2026, the standard for fee disclosure is "transparency at the point of choice." This means that estimated charges must be clearly labeled as such, and the "cost of borrowing" must be presented in a way that allows for easy comparison. The FCA has expressed concern over "shrouded fees"—costs that are technically disclosed in the fine print but are not emphasized during the advice process. To meet the 2026 standards, firms must test their communications to ensure that customers actually understand what they are paying for and why.
If a customer pays a fee but the mortgage does not proceed, the FVA must address whether this represents fair value. Professionals who have mabversations to build trust rather than resentment. They use clear, jargon-free language to explain the value of their expertise, the time spent researching the market, and the regulatory protections they provide. In the 2026 market, a broker who can articulate their value proposition clearly is not only more likely to be compliant but also more likely to secure repeat business from satisfied clients who feel they have been treated fairly.
The Role of Management Information (MI) and Outcomes Monitoring
The final component of the 2026 reporting standards is the shift toward "Outcomes Monitoring" via robust Management Information (MI). Firms are now expected to use dashboards that track real-time outcomes rather than just historical compliance data. This includes monitoring metrics such as complaint rates related to fees, the persistency of products recommended, and "dropout rates" at different stages of the fee-paying process.
