Price and Value

Following on from our communication which focused on the Products and Services outcome, below we concentrate on the Price and Value outcome and what it means to AXA, our customers, and brokers.

Who is affected?

Similarly, to the Products and Services outcome, these Consumer Duty requirements apply to firms which manufacture, co-manufacture or distribute products and services, including brokers, other types of intermediaries and insurers.

As with Principle 12 and the cross-cutting rules, this Consumer Duty outcome covers consumers, individuals acting in a business capacity and SME customers. It doesn’t apply to reinsurance, contracts of large risk sold to commercial customers or other contracts of large risk where the risk is located outside the UK.

Firms must assess whether the product and how they distribute it delivers fair value to customers. Covered under PROD 4, Fair Value Assessments (FVAs) are not new to insurers and intermediaries, as the requirement to complete these and make any changes where there is potential or actual harm was introduced in October 2021. The outcomes from our FVAs can be found at Target Market and Product Fair Value Statements - Commercial Lines| AXA Connect

What is it?

Customers can experience harm when they receive poor value for money. Firms providing poor value products and services will not be acting in good faith and will fail to deliver the right customer outcomes. As part of Consumer Duty supervision, the FCA will monitor how firms meet the Price and Value outcome and may take action where they see that firms are not acting to prevent or address customer harm.

The Price and Value outcome requires firms to assess the overall price customers pay when compared to the features, quality and benefits received by customers, so it is not simply about the price alone. When evaluating whether a product provides value, firms must consider:

  • The nature of the product or service, including the benefits which are provided or can be reasonably expected and their quality
  • Any limitations, including cover exclusions
  • The expected price customers will pay, including all applicable fees and charges across the product lifetime
  • If premium finance or add-ons are being provided, firms will need to consider their value and if the overall price is reasonable compared to the benefits

As with the Product and services outcome, firms must consider fair value across different groups of customers, including vulnerable customers. Firms should also benchmark fair value against comparable products where appropriate.

What does this mean?

Below, we outline what this outcome means for AXA and the impact for customers and our broker partners

Key elements of this outcome AXA's role as Manufacturer* Customer Impact* Broker Impact*
Assessing price compared to product
  • We assess new and existing products/services on an ongoing basis to ensure they are priced fairly in view of the product benefits and associated customer support provided
  • We obtain information from our broker partners to help us with our fair value assessments, so that services provided by distributors are also considered
  • Customers can feel confident that the price they pay is reasonable and value for money across the lifetime of our products, including at renewal
  • You may be asked to share information with us to help us complete our fair value assessments
Consideration of the total price charged to customers
  • We not only consider the fairness of our technical prices, but also product fees and charges
  • Remuneration costs, as part of the distribution chain, are reviewed to ensure they are fair and not excessive
  • When agreeing what remuneration to pay, we have controls to ensure that fair value and broader conduct related factors are considered
  • Customers can be confident the price is reasonable, including any associated charges such as administration or cancellation fees
  • There are also requirements for brokers to assess the cost and quality of their services to customers and how this impacts the overall value of the product
  • We may ask you for additional value and conduct information when agreeing remuneration
Taking action on poor value
  • If we identify that a product/service ceases to provide the intended value, we will take steps to amend it or even withdraw it if necessary
  • If we identify customer harm and need to remediate customers, we will let you know
  • Customers can be confident that if a product/service does not provide fair value, we will act to mitigate and prevent customer harm
  • You can have confidence when selling our products and services that we will act if we identify poor value
  • You should let us know if you identify any value issues resulting from your distribution arrangements which may impact our products
Barriers to claiming or cancelling
  • We have a programme of ongoing activity to review our policy documents and customer communications, including engaging with third parties, to ensure that target market customers understand what is covered, how to claim and how to cancel
  • We review administration, cancellation, and other charges to ensure they are not excessive and represent fair value
  • Customers can be confident that clear information will enable them to use the product as expected, and that any fees we may charge are reasonable
  • You may also be required to complete reviews of your own customer communications and fees/charges, if relevant to your distribution arrangements

**Examples are illustrative and not exhaustive

Data is crucial to how we will assess fair value. Working closely together and sharing information will help us to collectively oversee and deliver value to our customers. If you have any questions, please get in touch.