The Financial Conduct Authority (FCA) recently issued a damning assessment of firms’ response to the Product Governance and Fair Value rules. Whilst pockets of good practices have been cited as examples, the overarching theme in Matt Brewis’ “Dear CEO” letter of 23rd February is one of frustration with the lack of progress and priority given by firms. You can read our assessment of the contents of that letter in our article: FCA Fair Value & Product Governance ‘Dear CEO’ letter – Strike Two from the Regulator?
Firm Responses – How VisRisk Delivers
In its letter, the FCA updated the Insurance Sector on its interim findings on product governance and fair value assessments. The regulator’s conclusion was stark:
“We are disappointed that so many manufacturers are failing to adequately and consistently assess and evidence product value… Firms who fail to meet their obligations in this area fully, and who are unable to demonstrate that they are providing fair value to their customers, should expect us to intervene using the full range of our regulatory tools.” (FCA, 23rd February 2024)
The VisRisk fair value assessment (‘FVA’) platform addresses each failing identified by the FCA:
Product Governance
“…in some firms we saw shortcomings or inconsistencies in the application and evidencing of the product governance and value assessment framework.”
The VisRisk Fair Value Assessment platform provides:
- automated product governance at each stage of the FVA process.
- workflow that embeds responsibilities across 1st and 2nd line defences.
- an audit trail for all challenges on product reviews and fair value.
- the ability to log, assign and monitor actions.
Target market
“We found shortcomings in the target market statements produced by many firms, with these often being too high level and lacking in granularity for the product in question…”
The VisRisk Fair Value Assessment platform provides:
- form question-sets that are linked directly to PROD 4.2 of the FCA Handbook.
- forms that are flexible, granular and consistent throughout – using check-boxes and narrative with the ability for users to upload documents for further evidence.
Product Approval Process
“…many firms did not have sufficient, good quality management information to assess value, or appropriate metrics to identify product value issues…”
The VisRisk Fair Value Assessment platform:
- collects co-manufacturer, distributor and sub-distributor data, calculating end customer cost and distribution strategy adherence.
- segments target markets by different groups of consumers.
- provides the flexibility for metric tolerances to be varied by product.
- provides dashboards that identify products’ compliance with all PROD 4.2 rules.
Co-manufacturing
“Where multiple parties were involved in product manufacture, we often found that the individual firms could not show how they had met all PROD 4.2 requirements…”
The VisRisk Fair Value Assessment platform allows:
- manufacturers to assign FVA process responsibilities, per co-manufacturer agreements, to third parties.
- manufacturers to have full visibility of the entire FVA process, including product fair value reviews with detailed MI and automated product governance.
Request a Demonstration
If you would like to understand how VisRisk can help your firm meet the regulatory expectations around Product Governance and Fair Value, please speak with Kenneth Underhill, Claire King or your usual ICSR contact.
Kenneth Underhill
Director
