Denmark’s Financial Supervisory Authority (FSA, Finanstilsynet) has written to pension and insurance entities to gather data from the sector on how they ensure their products are suitable for their customers – and how they engage with rules such as the EU’s product and oversight governance (POG) requirements.

Using its 2021 annual Christmas letter (julebrev) to supervised entities for the purpose, the FSA said the rules required companies in the sector to have processes in place to ensure their products were appropriate for the customers to whom they were sold.

Rikke-Louise Ørum Petersen, deputy director general of the Danish FSA, said: “Insurance and pension products must be targeted at groups of customers, and the rules require that the products are appropriate for the target group.

“It may be that some customers have different needs from the rest of the group,” she added.

She said the FSA wanted to investigate how companies addressed the regulations – ensuring customers were not paying for coverage they did not need, for example – by examining how they defined various target groups, and created appropriate balances between considerations within different coverage packages.

In response to the letter, industry association Insurance and Pension Denmark (IPD) said it welcomed the authority’s investigation of how firms were adhering to the POG regulations, but called for the FSA’s approach to focus on creating value for customers.

Torben Weiss Garne, deputy director of IPD, said: “Basically, our members are totally focused on providing their customers with the coverage and services that Danes need. Neither more nor less.”

He added that it was important that the rules created value and protection for customers, and did not become “a bureaucratic monster, where companies are expected to ask all customers who want to take out car insurance if they also have a car.”

Back in February, the European Insurance and Occupational Pensions Authority (EIOPA) announced it had identified business model sustainability and adequate product design as supervisory priorities for member state supervisory authorities to home in on amid the COVID-19 pandemic.

In monitoring the effects of the crisis, EIOPA told FSA to ensure that POG requirements and other relevant consumer protection mechanisms were being implemented properly to address deficiencies emerging due to the pandemic.

In last year’s Christmas letter, the Danish watchdog heralded an investigation of pension funds’ management systems, requesting statements outlining whether the systems worked well given Solvency II requirements, along with other information.

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