PROD 7.3 Distribution of funeral plans

1A distributor must have in place product distribution arrangements containing appropriate measures and procedures to:

1. (1)

   aim to prevent and mitigate customer detriment;

2. (2)

   be consistent with the aim of providing fair value to the customer;

3. (3)

   support a proper management of conflicts of interest; and

4. (4)

   ensure that the objectives, interests and characteristics of customers are duly taken into account.

1. (1)

   1A distributor must ensure the product distribution arrangements contain effective measures and procedures to:

   1. (a)

      obtain from the manufacturer all appropriate information sufficient, adequate and reliable about the funeral plan products they intend to offer to their customers to ensure that they will be distributed in accordance with the characteristics, objectives and needs of the target market; and

   2. (b)

      fully comprehend those funeral plan products, taking into account the level of complexity and the risks related to the products as well as the nature, scale and complexity of the relevant business of the distributor.

2. (2)

   The information in (1) must be sufficient to understand:

   1. (a)

      the characteristics of each funeral plan product;

   2. (b)

      the outcome of the value assessment required by PROD 7.2.14R, including:

      1. (i)

         the value that the funeral plan product is intended to provide to the customer; and

      2. (ii)

         the impact that the distribution arrangements (including any remuneration it, or another person in the distribution chain to which it belongs, receives) has on the overall value of the funeral plan product to the customer; and

   3. (c)

      the identified target market of each funeral plan product, including any identified group of customers for whom the funeral plan product is not expected to provide fair value.

1For the purposes of PROD 7.3.2R, a distributor must consider at least the following:

1. (1)

   the benefits the product is intended to provide to the customer;

2. (2)

   the characteristics, objectives, interests and needs of the target market;

3. (3)

   the interaction between the price paid by the customer and the extent and quality of any services the distributor (or any person connected to it) provides; and

4. (4)

   whether any remuneration it receives in relation to the funeral plan product would result in the product ceasing to provide fair value to the customer.

1A distributor must, upon request, provide manufacturers with:

1. (1)

   information on the distributor’s remuneration in connection with the distribution of the funeral plan product;

2. (2)

   information on any additional product or service that the distributor provides to the customer, which may affect the manufacturer’s intended value of the product;

3. (3)

   relevant sales information, including, where appropriate, information on the regular reviews of the product distribution arrangements; and

4. (4)

   confirmation that the distribution arrangements are consistent with the obligations of the firm under the FCA Handbook, including in particular in SYSC 10.1 (Conflicts of interest) and SYSC 19F.3 (Funeral plan remuneration incentives).

1A distributor must set out the product distribution arrangements in a written document and make it available to their relevant staff.

1A distributor must ensure that all relevant actions taken by it or any other party in relation to their product distribution arrangements are:

1. (1)

   duly documented;

2. (2)

   kept for audit purposes; and

3. (3)

   made available to the FCA upon request.

1A distributor’s governing body must:

1. (1)

   endorse and be ultimately responsible for establishing, implementing and reviewing the product distribution arrangements; and

2. (2)

   verify internal compliance with those arrangements on an ongoing basis.

1A distributor must ensure that any specific distribution strategy that it sets up or applies is consistent with:

1. (1)

   the distribution arrangements set up by the manufacturer; and

2. (2)

   the target market identified in PROD 7.2 (Manufacture of funeral plans), including any customers to whom the product should not be distributed.

1. (1)

   1A distributor must regularly review, at least every 12 months, its product distribution arrangements to ensure that those arrangements are still valid and up to date.

2. (2)

   When determining the appropriate intervals for the regular review of their product distribution arrangements, a distributor must take into account the size, scale and complexity of the funeral plan product involved.

1When reviewing the product distribution arrangements, a distributor must verify that the funeral plan products are distributed to the identified target market.

1A distributor must amend the product distribution arrangements, where appropriate, in view of the outcome of the review of the product distribution arrangements.

1When a distributor becomes aware:

1. (1)

   that a funeral plan product is not in line with the interests, objectives and characteristics of its identified target market; or

2. (2)

   of other product-related circumstances that may adversely affect the customer,

it must promptly:

1. (3)

   inform the manufacturer; and

2. (4)

   where appropriate, amend the distribution arrangements for that funeral plan product.

1. (1)

   1A distributor must take appropriate remedial and mitigating action, including to amend its product distribution arrangements, where it identifies:

   1. (a)

      a product is not providing fair value for customers;

   2. (b)

      any aspects of a product that may mean it does not offer fair value; or

   3. (c)

      the distribution arrangements, including remuneration structures, may mean the customer is not being provided with fair value.

2. (2)

   The actions which the distributor takes for (1) must:

   1. (a)

      aim to mitigate the situation and prevent further occurrences of any possible harm to customers, including, where appropriate, amending the distribution strategy for that product; and

   2. (b)

      include informing any relevant manufacturers promptly about any concerns they have and any action the distributor is taking.