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FCA writes to firms on Product Governance and Fair Value expectations and actions ahead of the 30 September 2022 deadline for fair value assessments.

The FCA has written to firms to lay out their Product Governance and Fair Value expectations and actions (manufacturers and distributors) following a multi-firm-review ahead of the 30 September 2022 deadline for fair value assessments.

****The letters were both written on 29 July:

  1. The FCA expressed its dismay to insurance manufacturers for leaving fair value assessments to the last minute when they have to be completed by 30 September.
  2. A second letter on the same day was sent to insurance distributors which has given brokers a three-month extended ‘forbearance’ due the knock-on effect.****

 

An extract from the Manufacturers letter is below:

“A product manufacturer has until 30 September 2022 to review each product in scope of the transitional period for PROD 4 and ensure that it meets the fair value requirements in PROD 4.2. Firms’ responses to our survey showed that:
 a third of manufacturers had a product review schedule which extended into September 2022; and
 some of these firms planned to undertake a significant proportion of product reviews in Q3 2022. Our meetings with firms confirmed this remains the current position for many of these firms. A small number of these firms had brought forward their target end date to an earlier date in September or into August 2022.
Whilst most manufacturers we met were confident of meeting the 30 September 2022 deadline, there remains a real risk that some firms might not be fully compliant by the deadline.”

An extract from the Distributors letter is below: 

“The FCA is aware that a significant number of manufacturers have scheduled their value assessments in Q3 2022, and as a result may not have sufficiently considered the obligations of distributors in their timelines and the potential impact on customers. Today we have also issued a letter detailing our findings from our multi-firm review on this topic.

As a result, the FCA foresees potential for market disruption and customer harm, as we anticipate that value assessments may not be completed in time for distributors to be compliant with the new requirements and to be able to continue distributing products from 1 October 2022.”

 

Both letters can be found in the FCA Publications folder of our Compliance Stockroom (under “Other helpful resources and information”), please click here…

 

 

 

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