Under the FCA’s Product Governance Sourcebook (PROD) we are required to “take reasonable steps to ensure that the financial instrument (i.e. our products) is distributed to the identified target market” (PROD 3.2 (3)).
We also “should have in place systems and controls to manage adequately the risks posed by financial instrument design.” (PROD 3.2.5) and should ensure “the selection of appropriate distribution channels and the promotion of the financial instruments are accompanied by sufficient and correct information.” (PROD 3.2.2).
We meet these responsibilities through a number of measures, including:
- Restricting distribution to UK based FCA authorised Professional Advisers permitted to undertake regulated activities.
- Taking reasonable steps to confirm that the Professional Advisers using our products do not present any distribution risks that we can identify / conversely, seeking to identify any Professional Advisers who may present potential distribution risks.
- Taking reasonable steps to confirm that Professional Advisers using our products have a business model consistent with our identified target market.
- Taking reasonable steps to confirm that Professional Advisers using our products have sufficient knowledge and / or experience to distribute structured products.
- Aiming to provide all relevant information to Professional Advisers using our products and requiring them to distribute our products in accordance with that information (including mutual obligations outlined in our Professional Adviser Terms of Business).
- Documenting evidence to support the above.
- Analysing management information on the distribution of our products, to identify if they are being distributed in accordance with the identified target market.
We undertake a number of checks.
We will check your firm’s address to ensure it is UK based.
We will check your firm’s entry in the FCA Register (and potentially other sources), identifying if there is evidence of any criticisms, censures, disciplinary actions, fines or similar. If so, we may need to discuss the circumstances of these with you / your firm.