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- Robert Bell
Closed Product Reviews
Those who have paid even a passing interest in the implementation of the consumer duty will recognise that the timeline is not yet fully complete, with the closed product reviews being the remaining element. With the reviews due by the end of July, it is now time to start planning the content of those reviews. This article helps you to do so by addressing the key differences between open product reviews and closed product reviews.
PRIN 2A.3.5R tells us a manufacturer of a closed product must maintain, operate and review a process to assess and regularly review whether any aspect of the product results in the firm not complying with the cross-cutting obligations (PRIN 2A.2) in relation to existing retail customers.
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Compliance is achieved through a similar product governance framework as is required for open products, although, as outlined in PRIN 2A.3.5R, certain elements may be excluded. These are:
PRIN 2A.3.2R and PRIN 2A.3.4R: Product approvals
PRIN 2A.3.7R: The need to review the product at regular intervals including any event which could materially impact the outcomes customers receive
PRIN 2A.3.9R and PRIN 2A.3.10R: Product testing
PRIN 2A.3.11R: The need to define roles and responsibilities when there is a co-manufacturing relationship
PRIN 2A.3.12R: Distribution arrangements
Therefore, the above can be excluded from the product governance framework in relation to closed products, but what needs to be included? The essential element which must be incorporated is the closed product review. The review is primarily to identify if there are groups of retail customers impacted differently by the product, particularly if there are any groups, including vulnerable customers, adversely impacted by the product or service (PRIN 2A.3.6R).
Broadly the content is similar to the open product review with items such as the key features of the product, benefits and limitations to be reviewed against the target market – with a detailed understanding of the characteristics of groups of customers who have accessed the product. A review of data to assess whether there is non-compliance with any of the cross-cutting rules, particularly harms that can be measured is also an essential part of the review process.
A word of caution, the need to undertake value assessments apply equally to closed products as they do open products therefore an assessment is required if there is any significant adaptation of the closed product. The FCA clarify in PRIN 2A.4.21R: “In the case of a closed product, the reference to a target market in PRIN 2A.4.2R should be read as referring to the retail customers who are customers of the closed product.”
It’s now time to make your template for your closed product review, if you want to save time take a look at ours which can be downloaded here.
