Are You Really “Fine Under PROD”? Why Consumer Duty Changes Everything

It’s usually during a Consumer Duty review that the comment appears, delivered with the kind of confidence only hindsight can dismantle:
“We were fine under PROD, so we’re fine now, right?”

It’s a fair question, but one that reflects a deeper assumption many firms are now starting to question. It sits at the heart of the Consumer Duty vs PROD challenge that is emerging across the industry.

When Consumer Duty first arrived, many firms felt quietly reassured. They already had governance frameworks in place, with product files, rationales, target markets and oversight committees that had all been perfectly acceptable under MiFID II. PROD had taken effort to build, so it felt natural to assume it would form the backbone of the Duty response.

Three years later, that confidence is starting to wobble.

Why PROD Is No Longer Enough

The issue isn’t that firms got it wrong. Consumer Duty has shifted the centre of gravity.

Where PROD focused on designing and distributing products appropriately, Consumer Duty asks something more difficult to evidence: the customer’s lived experience.

Boards are no longer being asked whether a product is suitable in principle. They are being asked how they know customers are receiving fair value in practice, consistently and over time. The Consumer Duty vs PROD tension is no longer theoretical. It is now visible how firms are expected to evidence outcomes.

The Growing Gap in Governance Frameworks

This is where many senior managers can feel the gap widening.

A product file that made perfect sense in 2018 now feels thin when viewed through a Duty lens. A target market description that once showed robust thinking now reads like a broad assumption. An annual review cycle that seemed prudent under PROD now looks static in a world where the FCA expects firms to identify harm long before it becomes visible in complaints data.

None of this means the old framework is redundant, far from it. PROD still provides the foundation. But continuing to rely on it as the primary structure for Consumer Duty is a different matter.

This is where the Consumer Duty vs PROD gap becomes harder to ignore.

It is a little like relying on a handwritten map in an era of Sat Nav. It may still get you there, but you will need to do a lot more work to ensure the route is safe, current and evidence-led.

From Framework Ownership to Outcome Ownership

The real challenge for firms is cultural rather than procedural.

PROD allowed firms to set out what should happen. Consumer Duty demands they understand what actually happens.

Under PROD, the manufacturer’s documentation could carry much of the weight. Under Duty, distributors are expected to interrogate, interpret and, where necessary, challenge. The FCA no longer accepts a passive relationship between manufacturer and adviser. Firms are expected to form their own view of whether a product delivers value and whether their own clients experience that value.

What Consumer Duty Means for Senior Leaders

For senior leaders, this means shifting from framework ownership to outcome ownership.

It means asking not only whether governance exists but whether it is dynamic, questioning and proportionate to the risks in the firm’s business model.

It also means recognising that some of the assumptions baked into earlier product governance work, such as relying heavily on third-party assessments or mapping broad segments of customers to equally broad product sets, may not withstand a Duty-focused review.

The Risk of Getting This Wrong

The risks of complacency are equally clear.

A firm that continues to rely solely on its PROD documentation risks being blindsided during a Duty review.

If your firm is at that familiar point of quiet uncertainty, not in crisis, not non-compliant, but not entirely convinced that PROD still carries the weight it used to, now is the ideal time to reassess. Understanding where your current framework genuinely supports Consumer Duty, and where it needs to evolve, is one of the most valuable exercises a board can undertake.

Preparing for Your Consumer Duty Board Report

With July fast approaching, most firms will soon be putting their Consumer Duty board reports in front of senior teams. At that point, the real question lands: are you evidencing outcomes, or relying on legacy comfort? The Consumer Duty vs PROD question will sit at the centre of those discussions.

If you would like support sense-checking how your PROD framework stands up under Consumer Duty, or simply want a second view on whether you are evidencing outcomes clearly, feel free to get in touch.

You can contact us on (0161) 521 8641 or email info@b-compliant.co.uk