The FCA has raised concerns about firms failing to meet the new, enhanced product governance requirements which come into effect on 1st October this year.
The Regulator has issued a press release, a progress review, a Dear CEO letter and has even published a Portfolio Letter from April – all focusing on the need for firms to up their game if they are to meet the FCA’s expectations relating to product value and the new product governance requirements which come into force in a little over a month.
In its progress review the FCA found:
- Insufficient focus on customers, outcomes and product value, including when considering value in the context of Covid-19.
- Shortcomings in governance and oversight of products.
The FCA also highlighted that
- Some insurance intermediaries had not understood they were undertaking the role of manufacturer in the distribution chain or the additional requirements applying to this activity; and
- Some distributors (such as insurance intermediaries) may be receiving remuneration which bears no reasonable relationship to the costs or workload to distribute the product.
The Regulator is not mincing its words and has been very clear that some firms have ‘significant work to do urgently to be able to comply with the enhanced product governance rules. Firms that fail to do that work risk regulatory action.’
UKGI is working with firms to explain the practical impacts of the FCA’s product value requirements. We have issued bulletins walking firms through the new requirements and we are updating key documents and sections of our online compliance manual. We are also providing one to one advice through our technical helpline and onsite support.
If you are unclear about how the FCA’s expectations in respect of product value and, in particular, the new regulations effective 1st October might affect your business, please contact our compliance experts on 01925 767888, or email helpline@ukgigroup.com.