Author: Ruleguard – ruleguard.com
Under MiFID II and Consumer Duty, UK firms are required to implement an appropriate product governance framework. But how do you structure that framework? And how do you ensure that your framework is effective?
Under Consumer Duty, products and services must meet customers’ needs and offer fair value. Given the current cost of living crisis, the regulators are focusing attention on this specific area and encouraging firms to identify vulnerable customers and ensure that products and services do not disadvantage this category of customer.
What other regimes impact your product framework? If you’re providing investment management services, then you’ll also need to consider MiFID II and perhaps various other fund management regimes too.
Regardless of the activity that you’re undertaking and whatever regime you’re obliged to follow, firms need to consider the end goal.
The purpose of good product governance is to ensure that a firm’s products and services meet the regulatory requirements and thereby, prevent harm to the consumer or investor. If your product governance framework is to be effective, then it needs to encompass the full lifecycle of any product or service being offered. This means that firms need to document the decisions and rationale behind the design and launch of a product through to regular reviews and eventually closure of that product or service.
To aide investor protection and transparency, firms must address the key areas of weakness to demonstrate robust product governance.
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