On 2 November 2011, the FSA published a guidance consultation that sets out the findings of its review of how firms are designing structured products and contains proposed guidance on retail product development and governance (GC11/27).
In outline, GC11/27 sets out that firms should, going forward:
- identify the target audience and then design products that meet the target audience’s needs, rather than merely contributing towards the firms’ bottom line;
- stress-test new products to ensure they are capable of delivering fair outcomes for the target audience;
- ensure a robust product approval process for new products and be clear about what is a “new” product; and
- monitor the progress of a product through to the end of its life cycle.
GC11/27 also contains:
guidance on the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (UTCCRs), which takes effect immediately;
a cost benefit analysis; and
proposed guidance on the Prospectus Rules.
The deadline for comments is 11 January 2012.