Product intervention: Three things we've learned

The FSA yesterday put out its latest thinking on plans to intervene earlier in the product value chain.

Its Feedback Statement on product intervention also collated the views of industry stakeholders.

IFAonline has picked out three things you may not have known...

1) TCF is not working as well as it should

Not our words, but those of the FSA. The regulator said while its treating customers fairly (TCF) initiative has developed over time, Principle 6 in its Handbook has existed since the FSA's inception. It states: A firm must pay due regard to the interests of its customers and treat them fairly.

According to the regulator, several respondents to its product intervention discussion paper in January highlighted concerns over issues which have yet to impact on the market.

"So, even now, we question whether TCF is working as well as it might and if we should consider improvements to it," the paper reads.

The FSA said it now has plans to take forward a single set of rules on product governance.

This may include turning some or all of its TCF material (including its work on the Responsibilities of Providers and Distributors for the Fair Treatment of Customers (RPPD)) into rules.

2) Brace for more rules on 'non-reversible' transactions

It will not be news to you that individuals providing non-mainstream advice may require additional qualifications - beyond those needed for RDR - when sold to retail customers.

Among the types of non-mainstream activities suggested by respondents was transactions that cannot be reversed.

But what are they?

As an example, the FSA gave final salary to defined contribution pension transfers, but an awful lot of pensions work is 'irreversible'.

The FSA said it could see "some need" for considering qualifications for transactons that cannot be reversed, and it would take this into consideration when reviewing the pension transfer specialist exam standards later this year.

3) It is not all about point-of-sale

A question for you: Has there ever been a product unsuitable for everyone?

We ask because the view of a number of respondents to the FSA's discussion paper felt the point-of-sale represented the moment in the product cycle when consumer detriment begins.

Almost all products are suitable for at least some consumers, they said, and, with the Retail Distribution Review set to improve point-of-sale standards, there is no need for product intervention work.

But the FSA disagrees. "Product design and decisions made by product designers about how - and to whom - will be distributed play a significant role in determining consumer outcomes," it said.

This is a veiled warning to product 'designers'. We will be watching you, the FSA said.