Former FCA technical director Rory Percival has warned advisers are still unaware about new product governance rules introduced under Mifid II.
Speaking at a recent event held by Discus, Percival said few advisers he had met around the UK had heard about the so-called PROD rules.
PROD is a new FCA rulebook introduced as part of Mifid II in January. According to the regulator’s website, the purpose of PROD is to “improve firms’ product oversight and governance processes and to set out the FCA statement of policy on making temporary product intervention rules”.
Percival said: “Generally, advisers are not aware about PROD and it hasn’t really hit their radar yet.”
He said PROD is important for advisers so they understand their client bank.
He added: “Advisers are treating PROD as a tick-box exercise, but it is something they must be doing.
“It sets out the need for advisers to understand their client bank and ensure they design investment solutions and advisory services that work for their clients and segments of their clients.”
Percival said PROD will become extremely important because it “enshrines” into actions the decision by the FCA to put clients at the heart of the decision-making process.
He added: “I don’t see how the regulator can make a fundamentally non-competitive market become significantly more competitive. The only thing the FCA can do is to leverage off PROD.”