Summary Product governance is where fiduciary duty becomes operational. A framework that defines target market, distribution strategy and outcome monitoring throughout the product lifecycle is now a regulatory expectation in most jurisdictions and a defensive floor against conduct risk. This article sets out the core components.
Target market Target market definition specifies who the product is designed for — investment objective, risk tolerance, knowledge, experience, ability to bear loss, and time horizon. It also specifies who it is not for. The definition should be precise enough to guide distribution decisions, not so broad as to be meaningless.
Distribution strategy Distribution strategy defines the channels, distributor types and geographies through which the product is intended to reach clients. Oversight of distributors — including due diligence, information exchange, and complaint feedback — is a manufacturer responsibility.
Product approval New products should go through a documented approval process covering product design, target market, distribution strategy, disclosures, pricing and post-sale servicing. Approval should not be a rubber stamp; committee minutes should evidence real challenge.
Ongoing review Products should be reviewed periodically against actual client outcomes, complaint patterns and market conditions. Products that no longer serve their target market — or have drifted in distribution or performance — should be modified, withdrawn or restricted.
Conduct MI Conduct MI ties product governance to outcomes: complaints by product, redress trends, distributor feedback, vulnerable-client indicators, and value assessments. Governance without MI is process without evidence.
CRO and board implications Boards should test product governance against real cases — a recent launch, a recent complaint cluster, a recent product review — rather than framework documentation alone.
Practical implementation Documented product governance framework covering the lifecycle; product approval committee with defined challenge role; distributor oversight programme; conduct MI to the risk committee; annual review of product outcomes.
Limitations Regulatory expectations vary by jurisdiction (MiFID II product governance, UK Consumer Duty, US suitability standards, etc.). Application should be confirmed with qualified counsel.
Related reading See [Regulatory Compliance](/expertise/regulatory-compliance), [Corporate Governance](/expertise/corporate-governance) and [Investment & Asset Management risk governance](/insights/risk-governance-for-investment-firms).
Frequently asked questions
What should risk leaders know about target market?
Target market definition specifies who the product is designed for — investment objective, risk tolerance, knowledge, experience, ability to bear loss, and time horizon. It also specifies who it is not for. The definition should be precise enough to guide distribution decisions, not so broad as to be meaningless.
What should risk leaders know about distribution strategy?
Distribution strategy defines the channels, distributor types and geographies through which the product is intended to reach clients. Oversight of distributors — including due diligence, information exchange, and complaint feedback — is a manufacturer responsibility.
What should risk leaders know about product approval?
New products should go through a documented approval process covering product design, target market, distribution strategy, disclosures, pricing and post-sale servicing. Approval should not be a rubber stamp; committee minutes should evidence real challenge.
What should risk leaders know about ongoing review?
Products should be reviewed periodically against actual client outcomes, complaint patterns and market conditions. Products that no longer serve their target market — or have drifted in distribution or performance — should be modified, withdrawn or restricted.
What should risk leaders know about conduct MI?
Conduct MI ties product governance to outcomes: complaints by product, redress trends, distributor feedback, vulnerable-client indicators, and value assessments. Governance without MI is process without evidence.