1 PROD 2 sets out the FCA’s approach to issuing temporary product intervention rules. It is of relevance to all firms.

1 PROD 3 applies to

1. (1)

   a MiFID investment firm;

2. (2)

   a CRD credit institution;

3. (3)

   a MiFID optional exemption firm; and

4. (4)

   branches of third country investment firms;

5. with respect to:

6. (5)

   manufacturing financial instruments and structured deposits; and

7. (6)

   distributing financial instruments, structured deposits and investment services.

[Note: articles 1(3), 1(4), 16(3), 24(2) and 41(2) of MiFID]

5A TP firm and a Gibraltar-based firm must also comply with the provisions in PROD 1.3 and PROD 3 in relation to a pathway investment, with respect to activities carried on from an establishment maintained by it, or its appointed representative, in the United Kingdom.

1. (1)

   Subject to (2) other firms which manufacture or distribute financial instruments or structured deposits should take account of PROD 3 as if it were guidance on the Principles and other relevant rules and as if “should” appeared in PROD 3 rules instead of “must”.6

2. (2)

   Paragraph (1) does not apply to a firm to the extent that it is required to comply with Principle 12 (Consumer Duty) and PRIN 2A in relation to a product.6

PROD 3.3.1R does not apply to eligible counterparty business.

[Note: article 30(1) of MiFID]

PROD 3 applies to a firm with respect to activities carried on from an establishment maintained by it, or its appointed representative, in the United Kingdom.

1. (1)

   PROD 3 also applies to a firm with respect to activities from an establishment overseas with a client in the United Kingdom.

2. (2)

   But PROD 3 does not apply to those activities if the office from which the activity is carried on were a separate person and the activity:

   1. (a)

      would fall within the overseas persons exclusions in article 72 of the Regulated Activities Order; or

   2. (b)

      would not be regarded as being carried on in the United Kingdom.

1 PROD 4 applies to:

1. (1)

   an insurance intermediary; and

2. (2)

   an insurer,

with respect to:

1. (3)

   manufacturing insurance products; 8

2. (3A)

   product governance and distribution arrangements for legacy non-investment insurance products (see PROD 4.6); and8

3. (4)

   distributing insurance products.

[Note: articles 1(2) and 25 of the IDD]

6A TP firm and a Gibraltar-based firm8 must also comply with the provisions in:

1. (1)

   PROD 1.4 and PROD 4.5 (Additional expectations for manufacturers and distributors in relation to value measures data);8

2. (2)

   7PROD 1.4 and PROD 4 in relation to a pathway investment;8

3. (3)

   PROD 1.4, PROD 4 and (where applicable) PROD TP 1 in relation to non-investment insurance products (including legacy non-investment insurance products) that are, or will be, marketed or distributed, or there are policies under the product that remain in force, in the United Kingdom.8

5 PROD 4.5 (Additional expectations for manufacturers and distributors in relation to value measures data) applies regardless of when the product was first manufactured.

1 PROD 4 does not apply in relation to an insurance product that is:8

1. (1)

   a contract of large risks where the insurance product meets the conditions in PROD 1.4.-3AR;11 or

2. (2)

   a reinsurance contract.

[Note: article 25(4) of the IDD]

11The conditions in PROD 1.4.3R(1) are that the insurance product is used exclusively for effecting contracts of large risks where there are no:

1. (1)

   policyholder(s); or

2. (2)

   (where relevant) policy stakeholders, including, in relation to a multi-occupancy building insurance contract, any leaseholder,

who in that context are natural persons acting for purposes outside of their trade, business or profession.

3 4Where a firm:

1. (1)

   manufactures or distributes pathway investments or default options9 in connection with its operating of a retail client’s personal pension scheme or stakeholder pension scheme; and

2. (2)

   is not otherwise within the scope of the rules in PROD in relation to that manufacturing or distribution activity, then PROD 4, PROD 1.4.4R and PROD 1.4.10G12 apply7 with respect to that manufacturing or distribution activity.

   7

1. (1)

   12For the purposes of PROD 4, an insurance intermediary will be considered a manufacturer where an overall analysis of their activity shows that it has a decision-making role in designing and developing an insurance product for the market.

2. (2)

   For the purposes of (1), a decision-making role must be assumed, in particular, where an insurance intermediary autonomously determines the essential features and main elements of an insurance product, including its coverage, price, costs, risk, target market and compensation and guarantee rights, which are not substantially modified by the insurance undertaking providing coverage for the insurance product.

3. (3)

   Personalisation of and adaptation of an existing insurance product in the context of insurance distribution activities for an individual customer, as well as the design of tailor-made contracts at the request of a single customer, will not be considered manufacturing.

[Note: article 3 of the IDD POG Regulation]

1 PROD 4 applies to a firm with respect to activities carried on from an establishment maintained by it, or its appointed representative:8

1. (1)

   (for all insurance products and pathway investments) in the United Kingdom; and8

2. (2)

   (in addition, for non-investment insurance products) overseas, in relation to an insurance product that is, or will be, marketed or distributed, or there are policies under the product that remain in force, in the United Kingdom8.

[Note: in respect of (1),8 article 7(2) of the IDD]

10 PROD 4 applies in relation to an overseas non-investment insurance product with the following modifications:

1. (1)

   The changes made to PROD 4.2 and PROD 4.3 in Annex E of the Non-Investment Insurance: Product Governance, Premium Finance, General Insurance Auto-renewal and Home and Motor Insurance Pricing Instrument 2021 do not apply, unless otherwise specified in (2).

2. (2)

   The following rules and guidance in Annex E of the Non-Investment Insurance: Product Governance, Premium Finance, General Insurance Auto-renewal and Home and Motor Insurance Pricing Instrument 2021 continue to apply:

   1. (a)

      PROD 4.2.1AG;

   2. (b)

      PROD 4.2.21AG;

   3. (c)

      PROD 4.2.34AG; and

   4. (d)

      PROD 4.2.36BR.

[Note: the Non-Investment Insurance: Product Governance, Premium Finance, General Insurance Auto-renewal and Home and Motor Insurance Pricing Instrument 2021 can be found at [https://www.handbook.fca.org.uk/instrument/2021/FCA_2021_19.pdf]]

1 PROD 5 applies to a firm which:

1. (1)

   offers to sell an extended warranty to a customer; or

2. (2)

   refers, invites or induces a customer to obtain an extended warranty from a person connected to the firm;

in connection with the entering into of a rent-to-own agreement with the firm.

1 PROD 5 applies to a firm with respect to activities carried on from an establishment maintained by it, or its appointed representative, in the United Kingdom.

1 2 PROD 6 applies to a firm:

1. (1)

   that manufactures or distributes pathway investments or default options3 in connection with its operating of a retail client’s personal pension scheme or stakeholder pension scheme;

2. (2)

   within the scope of PROD 4 when manufacturing pathway investments or default options3, other than in connection with its operating of a retail client’s personal pension scheme or stakeholder pension scheme, as guidance with respect to that manufacturing activity;

3. (3)

   within the scope of PROD 3 when manufacturing pathway investments or default options3, other than in connection with its operating of a retail client’s personal pension scheme or stakeholder pension scheme, as guidance with respect to that manufacturing activity.

1. (1)

   1PROD 7 applies to:

   1. (a)

      a funeral plan provider; and

   2. (b)

      a funeral plan intermediary,

   with respect to:

   1. (c)

      manufacturing funeral plan products; and

   2. (d)

      distributing funeral plan products.

1A Gibraltar-based firm must also comply with the provisions in PROD 7 (Product governance: funeral plans).

1. (1)

   1For the purposes of PROD 7, a funeral plan intermediary is a manufacturer of a funeral plan product where an overall analysis of their activity shows that they have a decision-making role in designing and developing a funeral plan contract for the market.

2. (2)

   A decision-making role will be assumed, in particular, where a funeral plan intermediary autonomously determines the essential features and main elements of a funeral plan contract, including any of its price, costs, target market or guarantee rights, which are not substantially modified by the funeral plan provider.

3. (3)

   Personalisation of and adaptation of existing funeral plan products in the context of funeral plan distributions for individual customers, as well as the design of tailor-made contracts at the request of a single customer, are not manufacturing.

1 PROD 7 applies to a firm with respect to activities carried on by it, or its appointed representative, in relation to:

1. (1)

   a funeral plan product; and

2. (2)

   a subsisting funeral plan.