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Advisers urged to catch up on new product governance rules

Rory-Percival-on-stage-at-Platforum-event-2013.jpgFormer 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.”


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. This is all nonsense. We advise individual clients, not segments of our client banks. Generally we find clients are happy to take guidance on whether they need on-going services, or not. Its all down to their individual circumstance. Having predefined rules to lump clients into certain categories is “shoehorning” and just a waste of everyone’s time.

    • Philip Castle 16th May 2018 at 7:09 pm

      Like you we are a small firm dealing witha small client bank. As such we deal with all clients on an individual basis as I don’t think we’ve got one client whose situation is the same, there may be similarities and overlaps, but whilst we can segment and have in the past, the segments seemed to chaneg at the next review meeting so we had to revert to simply making sure that at each client meeting we could put hand on heart and say we truly KNEW our client (KYC).
      I woudl suggest the F-pack need the PROD ratehr than vice versa.

  2. Nicholas Pleasure 15th May 2018 at 3:55 pm

    Perhaps we should do the factfind and then send the file to the FCA so they can explain what we should recommend.

    This is micromanagement.

    I’m interested to know, is this advertorial? Does Rory pay for all the mentions he gets here?

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