Enhanced product governance came into effect 1 October 2021 and forms part of the wider FCA Fair Pricing Practices Regulations. Insurers as product Manufacturers, and brokers as product Distributors, must adhere to the new enhanced rules that apply to both personal and commercial lines products (in some instances brokers are also Manufacturers).

What is the regulation?

In 2021, the FCA’s rules for enhanced Product Governance extended to product manufacturers, requiring them to review and approve their in-scope products by 1 October 2022. The review requires an assessment of their products for fair value for policyholders.

Fair value is assessed by the:

• Product value
• Impact of distribution of our products on value

Product Oversight

The FCA’s new product governance rules (outlined in PS21/5 and PS21/11) have prompted us to make necessary enhancements, and we have taken the opportunity to clarify and confirm the apportionment of product governance roles and responsibilities between RSA and our partners.

In accordance with FCA guidance, we have ‘grouped’ selected policy wordings that are intended to deliver similar cover and outcomes for customers where the target market is consistent. This means that we are performing our reviews at an appropriate level to identify potential harm.

Product Approval/Review and Fair Value Reporting

Where RSA is the lead co-manufacturer (per PROD 4.2.14C / PROD 4.3.2), we will share our product approval/ review output (including fair value assessment) with relevant distribution partners.

Where RSA is the follow co-manufacturer, we expect our distribution partners to share relevant outputs from their own product approval/ review activities with us in a timely manner. We may also ask to review our partners’ product governance frameworks in some cases – where we delegate insurance underwriting authority, for example.

Distributor Product Information Template

Once our products are assessed and approved, and where we are the sole Manufacturer (per PROD 4.2.29 / PROD 4.3.2), the final output, a Distributor Product Information Template, will be shared with our relevant distribution partners. This will include details of the target market, suitable distribution methods, and a summary of the RSA product approval/ review outcome.

Our target market statement for each of our products includes consideration of:

• What customer need is met by the product
• Who the product is designed for
• Who the product is not designed to support
• Whether the product is sold with or without advice
• How the product should be sold

Should you have any questions, please contact your Key Account Manager or contact our mailbox: rsani@ie.rsagroup.com.

Impact of distribution on product value

The role of the distributor will often be you, as our broker partners. In that role you have enhanced Product Governance rules you must also apply with. One rule is that the Distributor is obligated by the FCA in accordance with PROD 4.3.10B to supply distribution information to us. This information is to enable us to consider the impact of the distribution of our products’ value, and so we can meet our value assessment obligations.

We have created an easy, quick and secure online method for the Distributors of our products to supply the information we require. Our online questionnaire follows the industry-standard set of questions, plus a few vital questions specific to RSA, which the product Distributor needs to complete for each of the products he places with us.

Complete the Partner Information Request Questionnaire

The distribution information enables us to understand the impact of distribution on product value so that we can complete our reviews. We need to confirm services and distributor remuneration (including commissions, fees and charges and any other remuneration) and seek confirmation that our partner’s remuneration is consistent with FCA regulatory obligations, including SYSC 19F.2.

If you have not received a link to complete your questionnaire, please contact us.

Product Value and our RSA Framework

We have made the necessary enhancements to our processes, systems and controls to establish a Product Governance Framework to address the additional requirements that came into effect on 1 October 2021 and build upon our culture of customer fairness. 

Our Framework considers our products’ design, approval, distribution, oversight, change, and withdrawal of products throughout their lifecycle, to ensure they deliver good customer outcomes and meet regulatory requirements. An overview of our Framework is detailed on this page.

Should you have any questions, please contact your RSA Key Account Manager, or contact our mailbox: rsani@ie.rsagroup.com.

How our Framework works

We use a set of questions to establish the inherent risk of our products, including consideration of product risk factors, that includes target market, product type, distribution method, etc.

The set of questions is driven by balancing quantitative (e.g., metrics) and qualitative information (e.g., processes and controls) to form our view on product value. These questions encompass product cover, utility, RSA service, and distribution, with further investigation and/or mitigating actions triggered by question responses, as appropriate.

Our ongoing Customer Outcome Monitoring also informs the timing of our reviews. When key metrics (e.g. Complaints) indicate potential – or actual – customer harm or poor value, we may accelerate the review for the impacted product(s).

Product Lifecycle

Within our Product Governance Framework we manage our products from identification through to closure.

The Framework has four component parts, after which we publish our Fair Value Assessments and Target Market Statements.