Product oversight and governance (POG) refers to the systems and controls firms have in place to design, approve, market and manage products throughout the products’ lifecycle to ensure they meet legal and regulatory requirements.
Good product governance should result in products that:
- meet the needs of one or more identifiable target markets;
- are sold to clients in the target markets by appropriate distribution channels; and
- deliver appropriate client outcomes.
For General Insurance firms PROD 4 has applied since the introduction of IDD on 1st October 2018 and applies to Insurers and Intermediaries.
The PROD 4 requirements vary depending on whether a firm is a “manufacturer” or a “distributor” with far more detailed rules applying to the former.
- “Manufacturer” is defined as “creating, developing, designing and/or underwriting a contract of insurance”.
- “Distributor” is defined as “advising on or proposing to a customer a contract of insurance which it does not manufacture”.
Insurance Intermediaries will normally be distributors but could as explained later be manufacturers or co-manufacturers in which case they will have wider regulatory responsibilities.
From 1 October 2021 the FCA introduced enhanced rules in respect of “fair value assessments” and annual product reviews. This chapter includes the new rules and a summary can also be found in ICOBS template section of this manual – ICOBS Appendix 4.
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