Fair Value Framework and Product Governance.

Understand your obligations

The information provided should prove invaluable when asked to evidence what you and your firm have done to embed fair value.

To ensure your customers enjoy the best possible value from the products you recommend through PMS, and in-line with the FCA’s recent guidance on the protection and general insurance (GI) value chain, we’ve introduced our Fair Value Framework.

So that means when you source protection for your customers through Zenith – or any other protection and GI solutions from PMS – you can enjoy confidence that the products you recommend have undergone thorough due diligence and are in-line with regulatory requirements.

Read on to find out about our Fair Value Framework and our product governance process.

About the regulation

In April 2019, the Financial Conduct Authority (FCA) published the results of its thematic review into the distribution chains of general insurance (GI) products. This was followed by Finalised Guidance, which was issued in November 2019.

Know your obligations

The guidance makes clear that any firm involved in the distribution of pure protection and general insurance products must:

• Consider the value that customers ultimately receive from their products and services
• Consider the impact of their distribution strategy (including the distribution method and the level of remuneration they receive) on the overall value of the product for their customers on an ongoing basis.
• Maintain appropriate systems and controls over the remuneration they receive.
• Maintain appropriate systems and controls (including the production and use of appropriate management information) over their pure protection and GI products and services.
• Consider their remuneration to ensure this doesn’t conflict with the requirement to act in the best interests of the customer.

About our Fair Value Framework

Here at PMS, we understand that you want to achieve the best possible outcomes for your customers while demonstrating full compliance with regulatory requirements.

That’s why we’ve introduced our Fair Value Framework, working closely with all our provider partners to ensure the products available to your customers through Zenith are in-line with regulatory guidance by offering true, ongoing value to the end customer

As part of our framework, we regularly request information from our provider partners to ensure clarity on the following points:

• All Zenith providers have a Fair Value Framework or equivalent in place
• Every product available through Zenith offers good value for the customer
• Providers monitor the value of their products on an ongoing basis
• Products are appropriate for the needs of the target audience
• New and amended products are subject to the provider’s product approval process and ongoing product governance

As part of this, we will also continue to monitor the premiums available through Zenith to ensure these are standard premiums and that they remain unimpacted by any commercial agreements with regard to remuneration.

So this means that when you recommend products from Zenith, you can be confident that, while your customers are receiving a good deal on their premiums, your firm will benefit from favourable remuneration terms.

Zenith: initial due diligence

Before launching our all-new Zenith protection solution in August 2020, our protection experts assessed Zenith’s customer population and target audience to establish the product types that would best suit the solution. We then reviewed which providers were active within this market and offered the products that suited the customer segments identified.

A formal tender process then took place and following an assessment, PMS chose the relevant providers to become part of the proposition.

Ongoing reviews

To ensure our Fair Value Framework continues to meet regulatory requirements, as well as those of its target audience, so that your customers can enjoy the best possible value from their policies, Zenith will be reviewed on an annual basis.

This continuous monitoring and oversight of Zenith is there to ensure that it remains appropriate for your needs and continues to offer fair value to your customers.

As part of this ongoing review, we also hold regular meetings with Zenith providers to assess their products and performance against the Sesame Bankhall Group (SBG) Fair Value Framework.

Where issues are identified, these are escalated to our Group’s Product Governance Committee, which will set formal remedial actions and oversee progress until they are appropriately completed. If we believe that a particular product or provider no longer offers fair value to customers, the product or provider will be removed from Zenith.

In addition to this, our Propositions team also liaises with product providers on an ongoing basis to ensure that we are provided with all appropriate information on the products offered via Zenith, including:

• The provider’s intended target market
• Suggested distribution strategies
• The main features and characteristics of the products offered
• Product risks and costs
• Any circumstances which might give rise to conflicts of interest to the detriment of customers

This enables us to appropriately monitor the products available to your customers from Zenith, to ensure that these products remain consistent with the needs of its target audience.

Alongside our ongoing review of the products and providers available, we will also maintain a continuous review of Zenith’s customer base to ensure that there are no product gaps for its target audience and amendments are made if gaps are identified.

Product governance rules

The processes outlined above with regard to our Fair Value Framework enable us to ensure that Zenith maintains accordance with the FCA’s Product Governance rules, helping to provide you with confidence that the protection products recommended and distributed by your firm are being assessed against these requirements. So when you choose Zenith, you know that these processes will also complement your firm’s own internal controls on insurance distribution.

We also apply similar arrangements to the GI products that are available via PMS. For more information on this, head to our GI Fair Value Framework page.

Find out more

For more information about our Fair Value Framework and our product governance processes, please don’t hesitate to contact your Regional Key Account Manager.