New PROD toolkit is key to compliance
Our toolkit, entitled A ‘PROD’ in the Right Direction, which is designed to help advisers achieve compliance with PROD has been published in full today and is free to download from our website.
The Product Intervention and Product Governance Sourcebook (PROD), came in as part of MiFID II and advisers are expected to be compliant. However, many advisers still have work to complete.
We know this because we consulted with groups of advisers to find out their issues and we also engaged with experts on the subject, including representatives from Diminimis, The Timebank, Threesixty Services and Compliancy Services.
What we discovered is that advisers find the process daunting and perceive it to be complex, while the experts are warning that the regulator is likely to clamp down hard on any adviser who isn’t complying.
Two important points that the experts made and that advisers ignore at their peril are:
- PROD is a set of rules and advisers cannot delegate responsibility.
- Advisers who fail to implement PROD effectively face the prospect of being severely punished by the regulator.
There’s been a wealth of material written about PROD so far but what we found is there is a real shortage of material that offers practical guidance on how to tackle the task.
According to the advisers we consulted with, it’s very easy to get lost in the finer details, which makes implementing an effective solution difficult. Keeping it simple and finding common ground among your clients is essential to avoid ending up with as many segments as you have clients. To avoid this, it’s necessary to have a structured, repeatable process and that’s what we’ve outlined in our toolkit.
The toolkit includes:
- Target Market Assessment: deciding how to segment clients.
- PROD Methodology and Map: a ‘how to’ guide to setting up a PROD approach.
- Your PROD Approach: how you can structure the process to meet your needs.
- PROD Policy: what you should document for your specific business.
What we also learned from speaking with advisers who have already achieved PROD compliance is that it’s not all bad news. When completed, it helps manage expectations between advisers and their clients, plus it creates a great opportunity for good advisers to differentiate themselves from the rest.