PRODUCT MANUFACTURING AND GOVERNANCE in the UK for INVESTMENTS and PENSIONS
two half days including the use of case studies from the company and beyond
Introduction
Finding the relevant FCA Principles & PROD rulebook
MiFID 2, ESMA guidelines, Art. 9 MiFID Delegated Directive, PROD 3
Insurance Distribution Directive, article 25, POG Regulation, articles 3-9, EIOPA Guidelines, PROD 4
TCF and the 6 outcomes and their application to products
FCA & EU powers to issue product intervention rules and intervene generally
Relationship between PROD, RPPD and COBS
Defining terms – ‘product governance’, ‘distributors’ and ‘manufacturers’ and why it matters
Systems and controls and governance
What arrangements do the rules require?
Building the necessary product governance structures
Who, what, when?
Independent review and challenge
The role of the product governance team or ongoing monitoring function
The tasks and approaches of product governance
The different types of review required
Core risk management for products and their governance
The role of compliance and senior management
Joint manufacturers
Conflicts of interest
The tasks
Identifying the target market
Working out who the product is suitable for and who it is not
Ensuring that value is delivered to the target market
Different roles of providers and distributors – and different target markets
Core design issues
Building a specification
Modelling
Value measures – defining value for money and the period of time involved
Drafting the terms and conditions
Common fund and wrapper issues – investment content, charges
Ensuring that service infrastructure is in place
Stress testing
Purpose
Method – what is there to test against?
Resilience – technologically, financially and other elements
The testing process and its governance
Distribution channels
Selection – internally and externally, technologically, advised or execution-only
Monitoring distributor behaviour
Working with IFAs and others
Changing or blocking distribution channels
Distributor Responsibilities
Know your product
Obligation to obtain material from manufacturers
Handling distribution chains
Identify target market and distribution strategy suitable for its clients’ needs, characteristics & objectives
Periodic review
Information sharing with manufacturers
Sales outside target market
Product material
Clear, fair and not misleading for customer material
Different standard for intermediaries-only material
Material for distributors
Key features and other mandatory material
Post-launch review
MI on customer types and distribution sources – lapses, complaints and claims
Researching the product and how it is being used
Ongoing review and acting on information
Managing failures – communication to customers and regulators, product withdrawals and compensation arrangements