TCC’s team of experts has become aware of some firms being challenged by the FCA on their product governance arrangements, following Consumer Duty work by the regulator in the insurance sector.

The regulator is particularly concerned about the lack of cohesive criteria used in fair value assessments and adherence to product governance. This generally indicates that some firms are either getting the assessment wrong or, if they are getting this right, it is more through luck than judgment.

What are the risks?

• A lack of initial gap analysis, meaning firms have not addressed the Product Intervention and Product Governance Sourcebook (PROD) or Consumer Duty outcomes
• Insufficient ‘go – no go’, meaning relevant stakeholders are not sufficiently involved
• Intuitive decision-making, indicating the firm’s risk appetite is not sufficiently established and/or utilised
• Inadequate oversight and challenge, suggesting Senior Management Functions (SMFs) and oversight committees are not sufficiently close to the details regarding risks, controls and required actions

Consider the repercussions

The knock-on implications arising from this discovery include assessment of systems and controls, corporate governance, culture and the ability of individuals to evidence they are effectively discharging duties.

These emerging risks, whilst not unexpected, have wide-ranging impacts for firms, mainly regulatory scrutiny and the potential for poor customer outcomes – with the advice is to take proactive action.

Now is the time to invite trusted experts to gain an invaluable, independent risk assessment of your firm’s approach.

TCC’s team of former regulators and industry practitioners can work with you on assessing your risks and ensuring necessary change or remedies are implemented. Get in touch to find out more.