Whatever Way You Review It … It Is A Tough Nut To Crack
Throughout the original journey to the FCA, the transfer of focus was distinctly from being a reactive to a proactive approach. The regulator operates in fact attempting to stop customer detriment before it comes about where possible.
A vital element of the regulator’s attention lies on products hence we have experienced a marked rise in scrutiny paid to product governance and product life-cycle management over the last three years since the regulator started.
A key question firms should really answer is precisely how, thinking of Conduct Risk and TCF, how they will guarantee and can adequately demonstrate they have put the consumer at the heart of their businesses. The FCA expects firms to become efficient in demonstrating this in the framework of all product and related, complimentary or supporting activities. Our company has also noted a large volume of Risk Mitigation Plan requirements concerning product governance, and questioning the robustness of the governance and approval arrangements, suggesting that this has become a potential hotspot for Boards and senior management.
There have already a large number of regulatory developments with this field previously even from the 2013 FCA Risk Outlook that confirmed that a priority to the regulator is that firms design services and products that answer real consumer needs and remain in their future interest. Although the current Business plan for 2016/17 does not spell it out, the firm’s culture and governance, encompassing the overall performance of independent governance committees (IGC’s) is likely to include product lifecycle. Various thematic reviews concerning product, for instance the publication on digital phone insurance, which underline the significance of a product with the FCA and therefore this must be associated with culture and governance, ergo a firm-wide matter.
Whilst we don’t forecast seeing a broad use of product bans, we are observing a greater programme of product governance reviews being launched by the FCA. Additionally it is obvious whenever action is initiated in respect of product intervention by FCA, there will undoubtedly be reputational and commercial impacts, to firms and their culture and overall governance will be investigated.
Actually, such powers will permit the FCA to:
Restrict the distribution and sales of certain product features;
Stipulate that a product is not advertised to some or all specific sorts of customers; and
In possibly the absolute most serious cases– mandate that a product is extracted from sale altogether.
These requirements pose some real demands for firms establishing, managing and reviewing their product governance and life-cycle strategies.
” How Many Holes Exist In Your Cheese?”
Examples of the key questions and challenges include:
Product and Customer Approaches
Have you got appropriately senior and experienced people involved with the setting of product strategy, having a sufficient and appropriate customer-centric approach?
Can you demonstrate that you have appropriately considered the propriety of all distributors for your products and fully understand their actions and are reassured with the customer journey?
Committees To Handle The Product Approval, Review and Governance Process
Can you show a demonstrably suitable balance of committee membership, having a clear and identified “voice of the customer”?
Can you show adequate documented evidence of customer-focused review and challenge?
Suitable Product Development and Approval Criteria
Do your processes and operational procedures produce clear identification of your target market and demonstrable customer needs for each single one of your products?
Are customer risks considered at an appropriate stage and sufficiently early enough during the product development process, including appropriate customer involvement while in the product design process?
Exactly how do you demonstrate evaluation of product-related risks for your customers, for instance distribution strategies, using third-parties, product sophistication or complexity and customer value?
Product Review Processes
Can you be certain that your particular products remain suitable as time passes for your target market and current environment whereby they are sold?
Does your Board demand and receive the right MI to efficiently monitor the product status to enable it to intervene where needed?
No matter what your needs are, we can provide an objective and detailed review of the evidence and assist you in plugging any gaps you may have.
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