Robust Product Governance
A Key Priority for Financial Services Firms
The mis-selling scandals over the last few decades have prompted regulators to demand better product governance from financial services firms. At the same time customers have become more demanding as they look for products they can rely on to meet their increasingly diverse needs.
Yet many firms still fail to create products that are transparent and appropriate to their target market. So how do you create a robust product governance framework?
Mis-sold payment protection insurance (PPI), interest rate hedging products, packaged bank accounts and structured products – the consequences of poor product governance have severely damaged public trust in the financial services sector. These products were not inherently bad but the governance under which they were created was poor which meant that faults were not identified until customers began to suffer and express concerns.
They all demonstrate the vital importance of having an efficient, well documented and robust product governance structure in place, something that is becoming ever more essential as regulatory pressure increases.
A robust product governance framework is relevant to all products, not just new ones, and the financial services sector faces a particular challenge. Increased competition, in part required by the regulator, as well as technological innovation and demographic changes are creating a demand for new product offerings.