Context
The FCA has updated its web page in relation to its pricing practices rules to confirm that it has conducted a multi-firm review to assess whether manufacturers of general insurance and pure protection products are undertaking the necessary work to comply with PROD 4 of the FCA Handbook.
On Friday 29th July, the FCA e-mailed a letter to all firms with general insurance permissions, and those that manufacture or distribute pure protection products. The letters explained the FCA’s findings along with the actions it expects firms to take. If your firm manufactures or distributes general insurance and/or pure protection products, and you have not received the letter, please contact the FCA at firm.queries@fca.org.uk.
Key points to note
- Firms should have received letter(s) explaining that, due to insurers and product manufacturers failing to sufficiently engage in the process, the 30th September deadline for conducting product governance and value assessments was being moved back by 3 months to 31st December where certain conditions were met.
- Although there is an extension until 31st December distributors will still need to assess their products by 30th September against three conditions to see whether they qualify for the forbearance. If not, distributors must still complete the value assessment and where they identify products that are not offering value take appropriate remedial and mitigating action. The circumstances that must be met for this forbearance to apply are:
- The distributor has identified the impact that the distribution arrangements have on the value of the product by 30th September 2022 and has completed any identified remedial action as a result of its assessment.
- The distributor has complied with any requests from the manufacturer for information specified in PROD 4.3.10BR.
- The distributor is able to demonstrate they received the manufacturer’s value assessment too late for them to be reasonably expected to meet their obligations by 30th September 2022.
- In the letters the FCA says it will be conducting further multi-firm review work looking at both manufacturers and distributors product governance and value assessments frameworks.
- This work ties in with significant parts of the Consumer Duty, namely the products and services outcome and the price and value outcome.
Next actions
Firms should read the letters, consider the FCA findings and expectations and how they apply to each firm’s activities. Any gaps or weaknesses in the current approach should be identified and firms should ensure explanations and evidence of any actions taken as a result are documented.