PwC's Managing upstream risk: Regulatory reform review - An asian perspective November 2013 | Page 24

2.18 Financial Products Governance

The Joint Committee of the three ESAs
published eight principles applicable to the
oversight and governance processes of financial
products. These principles cover in particular
the responsibilities of manufacturers and
producers in setting up processes, functions and
strategies for designing and marketing financial
products, as well as at reviewing the products’
life cycle and are as follows:
1. In order to minimise potential consumer
detriment, avoid potential conflicts of
interest, and ensure that the interests
and objectives of target markets are duly
taken into account, the manufacturer
should establish, implement, and review
on an ongoing basis product oversight and
governance processes.
2. The manufacturer’s executive board
should endorse the product oversight and
governance processes. Senior management
should take responsibility for compliance
with these processes before and after the
launch of a product, and should ensure that
adequate records of this assessment are
maintained.
3. As part of the application of its product
oversight and governance processes,
the manufacturer should identify the

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target market of the product; analyse its
characteristics; and ensure that the product
meets the identified objectives and interests
of that target market.
4. The manufacturer should conduct product
testing to assess how the product would
function in different, likely scenarios,
including stressed scenarios, to ensure that
the product is aligned with the interests and
objectives of, and leads to fair outcomes for
the target market.
5. When setting the charges and features of
the product, the manufacturer should also
take appropriate steps to ensure they are
transparent for the target market.
6. The manufacturer should select distribution
channels that are appropriate for the target
market and disclose clear, accurate and upto-date information to distributors.
7. The manufacturer should monitor
periodically the functioning and operation
of the product to ensure that it continues to
meet the objectives and interests of the target
market and should, where appropriate,
review the product to ensure compliance.
8. The manufacturer should take appropriate
action when issues that may lead to
consumer detriment have materialised or
can be reasonably anticipated.