16 Distributor responsibilities Distributors must have distribution arrangements in place for each product or service they distribute. The distribution arrangements must: • Avoid causing and, where that is not practical, mitigate foreseeable harm to customers. • Support management of conflicts of interest. Firms should not make any arrangements that could provide an incentive to employees to recommend a product or service when an alternative would better meet a customer’s needs. • Ensure the needs, characteristics and objectives of the target market for the product / service being distributed are taken into account. • Understand the products or services they distribute. Firms should not distribute a product or service if they do not understand it sufficiently. An adviser firm distributing their solutions direct to consumer i.e. where there are no other distributors in the chain – will need to ensure that their own internal processes result in the service only being provided to the correct client segments / target market. That will be the ‘distribution strategy’. Before a distributor ‘distributes’ a product or service it will need to consider how the manufacturer’s target market aligns with its own assessment of the needs, characteristics, and objectives of its own clients. Source: FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty (Para 2.20).
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