Following on from PS21/5, a new Product Governance Thematic Review has been announced the the FCA.
If you are a BIBA member, you may well have seen their recent announcement of some thematic work about to be undertaken by the FCA. For those who have not seen it, or may not be BIBA members, the release confirmed:
‘The Financial Conduct Authority (FCA) has kicked off a market engagement piece of work focussing on the product governance elements of its general insurance pricing practices rules introduced bypolicy statement PS21/5, which came into effect from 1 October 2021.
The FCA has selected a sample of firms including insurers, MGAs and insurance brokers, all with manufacturing responsibilities, with which to undertake the first phase of this work. The multi-firm work will consider whether these firms have:
An information request has been sent out to those firms in the sample. The FCA advises that this initial request has been designed with the intent that it does not create a significant burden and asking for information and documentation that firms should already have rather than needing to create anything bespoke or new. This information will be analysed during Q2 2022.
A smaller number of firms will then be selected to be included in a further, more detailed phase of the work commencing in the latter half of the year. This more detailed phase is a normal part of the FCA’s thematic or multi-firm discovery work, rather than an indicator of potential breaches or concerns. As is normal for multi-firm work, if the FCA identifies areas of concern or potential harm, it may look to take appropriate regulatory actions and to report any broader issues or concerns as necessary.’
At this stage, if you are purely an intermediary distributing, not manufacturing, products you are not likely to be called upon to help the regulator.
However, as mentioned in previous issues of ‘In The Loop’, the FCA is taking very seriously firms’ compliance with the PS21/5 requirements. As we have commented on before, the FCA has clearly stated that it is keeping a close eye on firms and will take anti-avoidance action if it deems in necessary. This is striking and not often seen language from the FCA and should not be ignored.
The FCA has linked compliance to the PS21/5 rules to the Senior Managers & Certification Regime. This means that compliance with the new rules needs to be allocated to a Senior Manager, with these individuals being held directly accountable if the FCA finds a deliberate intention to avoid complying with the rules.
Therefore, while you may not be directly involved with the thematic work, we highly recommend that you progress your product governance work to ensure your compliance.
In the event that the FCA extends their ‘multi-firm discovery work’ to distributing brokers, you want to make sure you have all your ducks in a row!
If you need help understanding how these rules impact you, and what action you need to be taking, please feel free to get in touch, we are here to help.