Financial firms should have adequate procedures and measures in place that ensure that the interests of consumers are taken into account in a balanced manner when manufacturing and / or distributing a financial product. A financial product must demonstrably be the result of the balancing of such interests. Only products that are in the interests of customers and are offered to a well-defined group of customers for whom the product is suitable (the target market) should be manufactured.
The product governance arrangements (the policy) should ensure that:
- the target market of the product is well defined;
- the operation of the product is assessed in various scenarios;
- the product information and, insofar as may reasonably be expected, the distribution of the product are adapted to and consistent with the target market;
- the policy and the products are subject to review and, if necessary, appropriate adjustment on a regular basis.
The extent to which the above elements are applied in practice depends on the complexity and impact of a product: the more complex and the greater the impact of the product, the greater the attention to detail should be in manufacturing and / or distributing the product. Various elements of the product development process often do not produce a black and white outcome. It is therefore important that firms should carefully weigh and record their decisions.