Former Financial Conduct Authority (FCA) man turned consultant Rory Percival has told advisers that the product intervention and product governance sourcebook (PROD) rules were "overdue".
Speaking at the Chartered Institute for Securities & Investments (CISI) annual Financial Planning conference in Birmingham, Percival (pictured) said there had been a lot of negativity around PROD from the advice sector, but the rules were necessary nonetheless.
PROD was introduced alongside the second iteration of the Markets in Financial Instruments Directive (MiFID II) in January last year by the FCA. The regulation requires advisers to evaluate each component in the value chain to ensure the cost and service is appropriate for the intended client segment.
The former FCA man argued that, even though the regulator had consistently told advisers they must keep clients at the heart of their decision-making choices, he has never met a single firm that is genuinely client-centric.
Additionally, he said despite the FCA's push for better suitability reports, advisers were routinely overlooking them. "The FCA has been going on about this for years and years and years, and suitability reports are still poor," he added. "The way I view PROD is simply a rather overdue set of rules."
'Used multiple platforms'
Expanding on his argument, Percival opined that advisers leave "a lot to be desired" when talking about services and charges and, referencing the client segmentation part of PROD rules, said using just one platform across a firm was something that does not work.
He said some advisers believe their favourite platform does all of the 'x', 'y' and 'z' that it needs to and so it is the right fit for everybody: "Advisers love [their chosen platform], paraplanners love it, clients love it." However, by using one platform, the regulation expert added, advisers were not thinking about the client enough.
Percival said he, nor the FCA, care if advisers love one platform, and instead asked delegates at CISI's conference to consider if it's "the right one for the clients".
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