The European Securities and Market Authority (ESMA) announced yesterday (1st of February 2021) the launch of the Common Supervisory Action (CSA) in cooperation with National Competent Authorities (NCAs).
The key areas of the CSA as per ESMA’s announcement are:
- how manufacturers ensure that financial products’ costs and charges are compatible with the needs, objectives and characteristics of their target market and do not undermine the financial instrument’s return expectations;
- how manufacturers and distributors identify and periodically review the target market and distribution strategy of financial products; and
- what information is exchanged between manufacturers and distributors and how frequently this is done.
What is Product Governance?
Product governance rules, in broad terms, stipulate that Investment Firms that manufacture and/or distribute financial products should address said products to groups of end-Clients, so that the product meets the interests, needs and objectives of said end-Client groups (target market). Investment Firms should also identify groups of end-Clients where these products may not be offered due to the Investment Firm’s assessment that the products do not meet the end-Client group’s interests, needs and objectives (negative target market). Please refer to CySEC’s Directive DI87-01 part III for the Cypriot legislative framework on Product Governance.
How can Complyport EU (formerly MAP S.Platis) assist you?
Our team of experts can offer you the following services:
- Advice on policies, controls and procedures relevant to product governance;
- Develop a tailored and practical action plan for compliance;
- Update existing policies and procedures;
- Provide answers to queries (Q&A service);
- Undertake a health-check on existing policies procedures to ensure compliance.
Contact us for more information on how we may assist you.
