10 Who is a co-manufacturer? A firm which distributes products / services must consider whether they are also a comanufacturer of the product / service they are distributing. If they are, they must apply the manufacturing rules. Whether or not a co-manufacturing arrangement exists will depend on the nature of the arrangements in place between the respective parties, the extent of any collaboration, and what happens in practice. The FCA have provided several indicators that a comanufacturing arrangement might exist and commented as follows: ‘A firm would be considered a co-manufacturer where they can determine or materially influence the manufacture of a product or service. This would include a firm that can determine the essential features and main elements of a product or service, including its target market.’ Source: FG 22/5: Final non-Handbook Guidance for firms on the Consumer Duty (Para 6.10). The target market of a product or service is a specific group of people with shared characteristics at which the product or service is aimed. The process of identifying the group of people with shared characteristics, and assessing how a proposition and its distribution strategy aligns to the identified target market, is known as the target market assessment. Indicators a co-manufacturing arrangement might exist include the following: • Ability to determine a product’s / service’s: – Charges – Terms and conditions – Essential features and main elements, including target market • Decision making role on elements such as target market or investment strategy • Ability to determine or materially influence the manufacturer of a product or service • Ability to mitigate issues arising from the product / service • Ability to set the parameters of a product / service or commission other firms to build it Whether or not a co-manufacturing arrangement exists will depend on the firm’s role and the degree to which it can determine or materially influence retail customer outcomes. It’s also important to consider how the arrangement is branded or marketed and what the consumer will understand by how the arrangement is presented (see further below under white labelling / co-branding).
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