Product design Identify the target market, namely which types of customers the product or service is likely to be suitable/non-suitable for. Stress-test the product or services to identify how it might preform in a range of market environments and how the customer could be affected. Have in place systems and controls to manage adequately the risks posed by product or service design. Providing information to distributors Ensure information provided to distributors is sufficient, appropriate and comprehensible in substance and form, including whether it will enable distributors to understand it enough to give suitable advice and to extract any relevant information and give it to the end consumer. Providing information to customers Have regard to its target market, including its level of financial capacity, when providing information to customers. Take into account what information the customer needs to understand the product or service, its purpose and the risks, and communicate information in a way that is clear, fair and not misleading. Selecting distribution channels Decide whether this is a product where it would be wise for customers to seek advice. Review whether how the product is being distributed in practice corresponds to what was originally planned or envisaged given the target market and make any necessary changes (including potentially ceasing to use a particular distribution channel). Post-sale responsibility Periodically review products whose performance may vary materially to check whether the product is continuing to meet the general needs of the target audience and take any necessary action. Put in place systems to manage the risks posed by financial promotions and act with due skill and care when passing on information provided by the provider. Assess whether customers are likely to understand information provided by the provider and whether any supplementary information may be necessary. Consider whether the nature of the products or services offered by the provider and whether they fit with their customers’ needs and risk appetites. Consider what impact the selection of provider could have on the customer. by the FCA. This includes investment products, insurance products and credit/ hire-purchase contracts. binding. However, non-compliance may indicate that the firm is in breach of one of the principles in the FCA Handbook. If a principle has been breached, the firm is liable to disciplinary sanction by the FCA. Breaching a principle does not give rise to actions for damages by a private person. Country Manufacturer Obligations Distributor Obligations Range of products Penalties
Country Manufacturer Obligations Distributor Obligations Range of products Penalties Taiwan The Regulations Governing Pre-sale procedures for Insurance Products requires that during product development an insurance enterprise must (amongst other things) must focus on insurance product design, devoting concrete attention to such matters as due professional care, due care of a good administrator, target market and safeguarding the consumer interests. The insurance enterprise must also convene at least half-yearly meetings to review matters such as safeguarding consumer interests, and make necessary adjustments and amendments. There is also a regulator pre-approval regime for insurance products. The Financial Consumer Protection Act imposes an individual suitability obligation on financial services enterprises that distribute products and services (Art 9). This includes requiring an internal product review committee. Insurance for manufacturer obligations Distributor obligations for all financial products and services. The regulator can impose a fine for breaches.
E: Country What are the powers? When can the powers be exercised? of products Wholesale / Retail United States The Consumer Financial Protection Bureau (CFPB) has power to intervene where conduct or practices are ‘unfair, deceptive or abusive’. This can involve administrative action through cease and desist orders and legislative action through rule-making powers. In order for the CFPB to exercise the rule making powers, the targeted action must be ‘unfair’ and ‘abusive’. For an action to be ‘unfair’, there must be a reasonable basis to conclude that the act or conduct being addressed is likely to cause substantial injury to consumers, which is not reasonably avoidable by consumers. For an action to be ‘abusive’, the target act or practice must materially interfere with the ability of a consumer to understand the terms and conditions of a financial product or service or takes unreasonable advantage of a lack of understanding on behalf of the consumer. Credit, deposit products and residential mortgages. Retail United Kingdom The Financial Conduct Authority (FCA) is empowered to make rules following consultation about a wide range of matters including to ban products or practices. The FCA is also empowered to make temporary product intervention rules (without consultation) that prohibit specified persons from undertaking certain actions (for example, selling the product to a class of persons). The prohibitions can be contingent on the specified person taking other actions (for example, restricting certain product features). The temporary product intervention rules are lapse after 12 months. During this period the FCA consults on and makes permanent rules. The FCA is empowered to make rules to advance the FCA’s: consumer objective (securing an appropriate level of protection for consumers); competition objective (promoting effective competition in the interests of consumers); or integrity objective (protecting and enhancing the integrity of the UK financial system) if directed by the Treasury. The FCA has indicated via Policy Statement that it will consider a temporary product intervention rule where it identifies a risk of consumer detriment arising from a particular product, type of product, or practices associated with a particular product or type of product (PS13/3). In addition to the risk of consumer detriment, the FCA has indicated that it will take into consideration whether the rules are: an appropriate and effective means of addressing actual or potential consumer detriment; Full range of products regulated by the FCA. This includes investment products, insurance products and credit / hire-purchase contracts. Both wholesale and retail