Regulatory gap analysis: FCA review of product governance
The FCA's latest review of product governance practices across 38 firms provides one of the clearest indications yet of what good looks like under Consumer Duty and where firms continue to fall short.
The publication shines a spotlight on how firms are applying existing requirements in practice and also provides some really useful tips on proportionality for smaller firms.
Several themes and findings stand out to us:
Target markets that are too broad or insufficiently evidenced
Consideration of how products meet the needs of different customer segments
The quality of outcomes monitoring post product implementation or change
Over-reliance on complaints data and what data can be used to support it
Expectations on how to measure whether interventions have actually improved customer outcomes
Poor consideration of distribution strategies and distributor oversight
How firms are adapting products, services and journeys for vulnerable customers
For firms that have invested time and effort into implementing the Consumer Duty, the review is a valuable benchmark. For others, it may raise some uncomfortable questions.
The FCA's examples of good and poor practice reflected the themes we have been discussing throughout our product governance thought leadership series.
The regulator's findings reinforce the importance of taking a reasonable, proportionate and outcome-focused approach to product governance, one that supports robust challenge without creating cumbersome governance processes that add little value.
We’ve developed a gap analysis to help firms assess their current position against the FCA's findings
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