6 April 2023
PIMFA welcomes industry guide on manufacturing, distribution, and co-manufacturing obligations under the Consumer Duty
PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, is pleased to announce the publication of a new guide aimed at helping advice firms and discretionary managers understand the circumstances in which they might be engaged in a co-manufacturing arrangement under the Consumer Duty.
The guide has been drafted by threesixty services LLP, with input and collaboration from PIMFA and DFM Connect, a group of firms providing discretionary services to advisers and their underlying clients. Firms may find it useful to consider this paper alongside another guide issued today on the structure of adviser/DIM relationships – this guide was first issued in October 2021 and has now been refreshed to take account of firms’ Consumer Duty obligations.
The Consumer Duty builds on the concept of ‘manufacturer’ that exists under the current Product Governance (‘PROD’) rules but also introduces the concept of ‘co-manufacturer’.
The purpose of the guide is to provide some clarity on the roles of manufacturers, distributors and co-manufacturers under the Consumer Duty, where advice firms and discretionary managers work together to provide investment solutions to retail investors. It explains what each of those terms means in simple language and provides examples and typical scenarios to illustrate the points. In many scenarios, firms will be performing multiple roles – for example: manufacturing a discretionary management service (‘manufacturer’) which is then distributed (‘distributor’) through advice firms. All parties in the distribution chain need to understand the role they are performing and what their responsibilities are.
Some arrangements may go beyond pure distribution arrangements and fall under the definition of ‘co-manufacturing’. Working out whether a ‘co-manufacturing’ arrangement exists requires careful analysis and subjective judgement. The answer will depend on a number of ‘indicators’ and crucially what happens in practice. The guide explains these indicators, including the position for white labelled or co-branded solutions. It also contains a checklist for advice firms and discretionary managers to use to establish whether a formal co-manufacturing arrangement exists under the Consumer Duty and what the implications of that arrangement are for each party.
Copies of this guide are available upon request from the threesixty services website, or by emailing threesixtyguides@threesixtyservices.co.uk.
Liz Field, Chief Executive of PIMFA, commented:
“The roles of manufacturers, distributors and co-manufacturers under the Consumer Duty have been the subject of much industry debate. Consequently, I am pleased to welcome today’s guidance, produced by threesixty services LLP in collaboration with PIMFA and DFM Connect. By describing the roles in greater detail and providing examples of how they apply in the context of different business relationships, the guide will help advisers and discretionary managers to ensure that they present their services to clients accurately and that their documentation reflects the true state of play.”
Vanessa Johnson, Head of Compliance Strategy at threesixty services, commented:
“It’s been a pleasure to work with a number of industry partners on this critical issue. We have received a large volume of queries from a wide range of firms on whether they are a manufacturer, distributor or co-manufacturer under the Consumer Duty. This guide explains the terminology, provides examples and crucially provides a checklist for firms to use to establish whether a co-manufacturing arrangement exists. It will help firms with their audit trail for recording what role they are performing for each of the products and services they provide to retail investors. We are delighted to bring some clarity to this area as firms continue with their Consumer Duty implementation.”
Sean Taylor, Chair of DFM Connect and Intermediary Development at Canaccord Genuity, commented:
“The Consumer Duty is set to be the biggest regulatory overhaul in a decade to how firms service consumers. As we rapidly approach the go-live date, it is my absolute pleasure to welcome this Industry Guide on manufacturing, distribution, and co-manufacturing obligations under the Consumer Duty. This guide serves as an invaluable resource for our sector and indeed the collaborative efforts of all involved in developing this document have been outstanding. As an Industry group we believe it will aid all firms across the landscape and is a most welcome addition to the toolkit”.
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NOTES TO EDITORS
About PIMFA – the Personal Investment Management & Financial Advice Association
- PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
- The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
- PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies. Associate members provide professional services to the PIMFA community.
- PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
- PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
- Further information can be found at pimfa.co.uk
Contact
For further information on this release or other press matters please contact:
PIMFA Communications and PR – +44 (0)20 7382 0376
Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225
