The FCA has updated its webpage concerning its thematic review of product governance in small and medium-sized banks.
The thematic review looked at two-year fixed rate savings products from a sample of small to medium-sized banks. It focused particularly on how firms’ product governance frameworks help them identify and manage the ongoing conduct risks of their products.
The FCA reports on what it found whilst conducting the thematic review and sets out on the web page examples of good practice. The FCA also sets out areas for improvement:
- some firms needed to strengthen their product review processes to ensure they act on any identified lessons or risks. For example, recording the outcome of product reviews more clearly;
- all firms’ gave clear and concise information in their letters to customers. However, some firms need to be clearer in their terms and conditions and other product information about whether customers can withdraw funds before the term ends without penalty; and
- none of the firms in the FCA’s sample tested customer understanding. The FCA encourages firms to familiarise themselves with the Parliamentary Commission on Banking Standards’ recommendations about testing customer understanding, which the FCA has responded to, as well as its thematic review on customer understanding (our blog is here).
View Retail banking: product governance review, 5 March 2018