MiFID II Product Governance

MiFID II Product Governance Course: Why Focus on This?

• Why does this matter?

• What are the regulations designed to achieve?

• ESMA, FCA & Other Regulatory Directives

• The latest news

• MiFID II requirements in PROD

MiFID II – Manufacturers

• The product life cycle and manufacturers’ responsibilities, and consideration of good practice

• Idea Generation – including a deep dive into the construction of a Target Market and ESMA (The European Securities and Markets Authority)

• Design – encompassing Investment Proposition, Costs & Charges, Risk, Stress Testing, Operations, Compliance, Legal & Tax

• Distribution Strategy – what to consider, including an exercise on the risks of different methods of distribution and inducements

• Product Approval & Launch – responsibilities of senior management and the Product Governance Committee

• Marketing & Distribution – relationships with and information provided to distributors

• On-going Product Maintenance – post-launch review, compliance monitoring, significant adaptations, crucial events and management information

• Maturity & Withdrawal – Focus on Treating Customers Fairly

• MiFID II Case Study 1 – New Product Launch

MiFID II – Distributors

• The pre and post-sale responsibilities of distributors, including consideration of good practice  Obtaining sufficient information from manufacturers inside and outside of the EEA

• Distribution strategy – Target Market Assessment: What happens if the distributor doesn’t agree with the manufacturer?

• Post-sale reviews – what to consider, who should conduct the review and who should read and act upon the results

• Reporting – information to manufacturers and distribution chains

• Management Information – what should be included and who should receive and who should act on it?

• MiFID II Case Study 2 – MiFID II Portfolio Management

Product Governance Framework

• What elements should be included in your product governance framework?

• Structure of the Product Governance Committee – responsibilities, who should attend, their knowledge and experience, key areas of focus, the information it should receive, reporting and escalation

• Product Governance “best practice” checklist

• How should this work in practice?

• Impact on Manufacturers, Distributors or both

MiFID Product Governance Course: ESG

• What is ESG?

• What impact does it have on product governance?

• The general rules

• ESG Amendments – mandatory from November 2022

• ESMA Final Report Guidelines

• ESG template

• Dealing with ESG in practice

Training Objectives

• Learn more about why MiFID II Product Governance is such an area of focus

• Be taken through a summary of the FCAs PROD Sourcebook and how it applies to the product life cycle

• Understand the different responsibilities of manufacturers and distributors, and how they should interact

• Think about how other areas of MiFID II (Markets in Financial Instruments Directive) relate to the FCA Product Governance process

• Discuss what their Product Governance framework should now look like

• Think about how their Product Governance Committee is structured, what it should focus on, the information it receives and who its participants should be

• During this MiFID II product governance training course, you will participate in Case Studies to cement your understanding

Training Course Summary

Our MiFID II product governance training course covers the necessary topics and requirements. The FCA has long been focused on Product Governance and published its guidance on “The Responsibilities of Providers and Distributors for the Fair Treatment of Customers” (RPPD) back in 2007.

Since 2007 there have been many high-profile failures – Payment Protection Insurance (PPI), LIBOR and Interest Rate Hedging to name a few. Alongside other market developments, these failures led to the inclusion of formal MiFID II Product Governance rules, which the FCA has translated into its new PROD Sourcebook.

The MiFID II Product Governance requirements go further than the RPPD, introducing new concepts, such as the MiFID II Target Market, which affect every part of the product life cycle. The FCA expects firms to rigorously implement PROD and ensure that customers’ interests are put before all else in the manufacture and distribution of products and services.

In this MiFID II product governance course, we will identify the changes firms need to make to their existing Product Governance frameworks, including where other aspects of MiFID II should be considered. We will also discuss what your Product Governance Committee should focus on, and the roles and responsibilities of the various participants in the process.