FCA is worried that many firms are not currently compliant with its rules and guidance on product governance and value, and will not be ready to meet the new requirements which take effect on 1 October.
It has carried out a multi-firm review of over 20 firms with responsibility for manufacturing products within different sectors of the general insurance and protection market, which found weaknesses including:
- insufficient focus on customers, outcomes and product value; and
- shortcomings in governance and oversight of products – while firms appointed senior managers to oversee products, in some firms there was little evidence of challenge or senior input
FCA has published many materials in the past few years, including material specific to its expectations of how firms address product guidance in the context of Covid-19.
The rules, and FCA’s expectations, apply to all firms in the distribution chain, and one key concern of FCA’s is that it is sometimes unclear whether broker remuneration bears a reasonable relationship to the costs or workload of product distribution.
FCA now expects firms still undertaking a review of whether and how to return value to customers following the pandemic to conclude their process, and, of course, to meet the new product governance rules and frameworks on time.