Content Options:

Add to favourites

View Options:

More Resources:

External link Handbook Publications

You are viewing the version of the document as on 2024-12-10.

PROD 4.6 Application of PROD 4.2 and 4.3 for legacy non-investment insurance products

Application

PROD 4.6.1R

1PROD 4.6 applies to:

  1. (1)

    the manufacturer of a legacy non-investment insurance product, which includes:

    1. (a)

      an insurance intermediary which has a decision-making role (in whole or in part) in relation to the manufacture of a legacy non-investment insurance product;

    2. (b)

      an insurer that is responsible for the manufacture of a legacy non-investment insurance product including whoever currently underwrites the legacy non-investment insurance product; and

  2. (2)

    a firm that distributes (including the renewal of an existing policy) a legacy non-investment insurance product.

PROD 4.6.2R

1For a product falling within (2)(b) of the definition of a legacy non-investment insurance product, any reference to distribution or renewal is to be treated as including the ongoing collection of premiums in relation to a policy that remains in force.

Purpose

PROD 4.6.3G

1The purpose of this section is to set out the product governance distribution arrangements for, and how PROD 4 applies to, legacy non-investment insurance products.

Manufacturers of legacy non-investment insurance products

PROD 4.6.4R

1A manufacturer of a legacy non-investment insurance product must apply the product approval process in PROD 4.2 to that insurance product.

PROD 4.6.5G

1For the purposes of PROD 4.6.4R a manufacturer will need to demonstrate it has arrangements to meet the following:

  1. (1)

    general product approval process requirements (PROD 4.2.5R2 to PROD 4.2.14R);

  2. (2)

    fair value assessment (PROD 4.2.14AR to PROD 4.2.14SR);

  3. (3)

    target market requirements (PROD 4.2.15R to PROD 4.2.21AG);

  4. (4)

    product testing (PROD 4.2.22R2 to PROD 4.2.26G);

  5. (5)

    distribution channels and information disclosure to distributors requirements (PROD 4.2.27R2 to PROD 4.2.32DG); and

  6. (6)

    monitoring and review of insurance products (PROD 4.2.33R to PROD 4.2.39AR).

PROD 4.6.6G
  1. (1)

    1Firms should take into account all relevant factors, including those in PROD 4.2.3G and PROD 4.2.3AG, when identifying the necessary product approval process and arrangements including, in particular:

    1. (a)

      previous product governance arrangements including reviews which the firm (or another person) has undertaken and the extent to which these would or would not have complied with PROD requirements; and

    2. (b)

      the potential level of harm which could result from the product in question.

  2. (2)

    Firms should ensure the product approval process has the necessary measures to identify whether the insurance product is, or remains, appropriate to be marketed or distributed to customers.

PROD 4.6.7R
  1. (1)

    1A firm must determine whether the legacy non-investment insurance product should continue to be marketed and distributed (including renewals for existing customers).

  2. (2)

    Where a firm does not approve the continued marketing and distribution of the product, including where the firm has been unable to identify that the product, or where relevant, the package provides fair value for the purposes of PROD 4.2.14AR or, where relevant, 4.2.14BR, it must immediately:

    1. (a)

      cease marketing or distributing the product or package (whether directly or indirectly), including any renewal for an existing customer; and/or

    2. (b)

      make such changes as are necessary for the product or package to provide fair value.

Distributors of legacy non-investment insurance products

PROD 4.6.8R
  1. (1)

    1A firm which distributes, or will distribute, a legacy non-investment insurance product must meet the requirements in PROD 4.3 in relation to that insurance product.

  2. (2)

    A firm must put in place the necessary arrangements for the purposes of (1), including for:

    1. (a)

      obtaining any necessary information from the manufacturer;

    2. (b)

      providing any necessary or relevant information to the manufacturer;

    3. (c)

      understanding the product, identified target market and value assessment;

    4. (d)

      ensuring adequate oversight, including the ability to obtain necessary or relevant information, of any other persons involved in the distribution with whom the distributor has a direct relationship; and

    5. (e)

      the regular review of the product distribution arrangements including to take appropriate action in order to avert the risk of consumer detriment.