We recently hosted the first of our Verve webinar series: A Nod to PROD. With a record number of sign-ups, we anticipated a lively session, and we weren’t disappointed! There were numerous questions raised during the 45-minute webinar which we have handily summarised below…
Q. What is your view of how PROD applies to ARs?
A. Our belief is that every firm that provides regulated advice should have a robust PROD, irrespective of whether they are a DA firm or an AR. This is around ensuring that you have Product Governance in place for your clients and that you have the client’s needs at the heart of both your product and service proposition.
Q. With so many advisers working as self-employed individuals within a particular firm/group and the drive for consistency of outcomes, how do we justify that we are truly self-employed? Thinking along the lines of IR35… it’s not a question re independent vs. restricted. It’s a question of an individual being able to work as they please rather than things being dictated by the company at large?
A. This is a question for your accountant and tax advisers. From a compliance perspective, it is vital that you have the consistency of outcomes and that strong Systems & Controls and Governance is in place, irrespective of the employment status of the advisers.
Q. Is there any problem with having 2 products/solutions within one PROD segment? Do we have to be as rigid as to pick just one?
A. Absolutely no issues at all, in fact, it shows good PROD to have sub-segments that where clients have different needs, different services/solutions are more appropriate.
Q. Should providers be referenced in the PROD document?
A. In our view, yes, where possible. Unless you have model portfolios where it is difficult to list all underlying funds within the model and where regular switches would lead to amending PROD each time. That can be left to the CIP/CRP.
Q. PROD 3.3.30 – Info sharing with product manufacturers post-sale – what does this look like in practice?
A. From our experience and as outlined in the FCA update this week, this is one area that has been regularly overlooked and we think it comes from both sides. Many distributors are not aware of the need to share information on any sales made outside the target market, complaints received or responses to client samples. It is our belief that a lot of this comes back to firms having confidence that they are only providing advice to the target market as defined by the manufacturer, and have had no complaints and have not received any client sample questionnaire requests.
This is obviously more of an issue when you are looking at non-standard investments, tax-efficient investing and esoteric investments, which for many firms, only accounts for a very small proportion of advice provided. What possibly needs to happen is a more open and structured dialogue (an annual questionnaire would be an easy option) between manufacturers and distributors to ensure that the information needed by the manufacturer is being passed back up the line.
Christian Markwick – Head of Adviser Support, Apricity Compliance