The product governance component of the Markets in Financial Instruments Directive (Mifid II) is aimed at making sure advisers are offering their clients suitable solutions by requiring product manufacturers and distributors to identify target markets.
During a Treasury select committee hearing on 15 January 2019, FCA chief Andrew Bailey said: “We will do work this year on new product governance and on research unbundling, which has also been quite an issue, and we want to see how that has been working.
“All that work is a product of our supervisory work as to how effective the application of Mifid II has been.”
The FCA had product governance requirements before the introduction of Mifid II in January 2018, but they were more specific than the new rules in terms of what was covered.
Charges and enforcement
Bailey also admitted to the select committee that the regulatory focus around Mifid II last year had been on matters surrounding cost and charges.
In September 2018, International Adviser reported on a survey which found more than 40% of advisers had reviewed their charging structures in the first half of the year.
He also confirmed the FCA is yet to take any enforcement action under Mifid II, stating “we have been focused on supervisory action”.
When asked by Nicky Morgan MP, chair of the Treasury committee, if enforcement action was expected under Mifid II, Bailey replied: “If we find things that meet the test, yes; if we don’t, no.”