The Joint Committee of the three European Supervisory Authorities (ESA's) has published eight principles applicable to the oversight and governance processes of financial products. These principles cover, in particular, the responsibilities of manufacturers and producers in setting up processes, functions and strategies for designing and marketing financial products, as well as at reviewing the products’ life cycle.
The Joint Position highlights in particular that the design of financial products and services poses risks to consumers when the target market is not correctly identified. These risks can also arise when the objectives and characteristics of the target market are not duly taken into account in the marketing of products to consumers. These issues have previously arisen at EU level across the three sectors of banking, insurance and securities.
The eight high level principles also stress the importance of the controls that manufacturers should put in place before launching their products, thus discouraging products and services that may cause consumer detriment from entering the market and thus ultimately enhancing consumers’ confidence in financial markets.