Answer 2

As part of the product approval process, firms should have clear and robust policies and procedures to identify and quantify all product related costs and charges. This encompasses all implicit and explicit product costs but also service costs likely to be incurred by the client (e.g. inducements).

These policies and procedures should be approved by the management body and should be assessed and monitored by the compliance function aspart of the general obligation to “monitor the development and periodic review of product governance arrangements” [On this topic see also ESMA Guidelines on certain aspects of the MiFID II compliance function requirements [Ref: ESMA35-36-1946] and specifically guideline 4 that states “Firms should ensure that the compliance function fulfils its advisory and assistance responsibilities, including [...]participatingin the establishment of policies and procedures within the firm (e.g. the firm’s remuneration policy or the firm’s product governance policies and procedures)”].The policies and procedures should be be robust and documented, with a clear determination of roles and responsibilities in the process.