Complying with the rules?
Mr Scott says: "Firms comply with Prod rules by having an effectively functioning product governance committee with the appropriately skilled and competent resources across the business to provide robust challenge."
He adds: “The committee should oversee the process and have a thorough understanding of the requirements. The compliance, risk, product and financial teams should all be involved in the approval process and committee.”
So to what extent does Prod ensure that providers are complying with the rules?
Mr Jones notes that fund managers are supplying their raw product governance information via the European Mifid template (EMT).
The European Mifid Template was designed by the European Working Group. This includes European asset managers, banks, insurers and distributors and has been endorsed by the European Fund and Asset Management Association.
It is a spreadsheet containing 66 items to be filled out by the management company as the manufacturer of the fund.
But Mr Jones observes inconsistencies in the way product governance information made available in terms of insurance products.
“Some providers offer a very brief and wide target market description, whereas others have described not only the target market, but have been specific about the type of customer for whom the product might not be suitable (the negative target market.”
He adds: “In terms of the suggested distribution channels for their products, we have seen some providers to be fairly opaque with descriptions such as ‘intermediated sale’ whereas others have been explicit in suggesting whether their product might be unsuited to execution only or non-advised sales."
