Product Governance Policy & Fair Dealing Principle

Product Governance Policy & Fair Dealing Principle

Objectives

Principal Asset Management Company Limited (“Company”) has the objective to launch and offer its product of the Mutual Fund (“Fund”) by taking into account the demand and benefit of the investors in accordance with the Product Governance and Fair Dealing Principle. Further, the Company intends to cause its working system in connection with the launch and offering of the Fund’s product to be appropriate, adequate and efficient. Therefore, the Board of Directors of Principal Asset Management Company Limited (“Board of Directors”) has approved to impose the working procedure in connection with the Product Governance including the Company’s strategic plan regarding the above-mentioned matter on 8 June 2017, in order to express the importance in operating business by taking into account the demand and benefit of the investors in accordance with the Product Governance and Fair Dealing Principle. 

Principal Asset Management Company Limited has imposed the policy, strategic plan, working system and the operating procedure regarding the launch and offering of the Fund’s product, as follows:

1. Organization Chart, Role of the Board of Directors and Duties of High Level Executives

The Company has imposed its management structure, working system including appropriate and adequate personnel in order that their operation will be efficient in accordance with the Product Governance Policy and Fair Dealing Principle and to achieve the objectives as follows:

1)    The Company’s design and offering of product fulfill the investors’ need by taking into account their benefit in terms of product, providing of service as well as relevant risk;
2)    The investment advisor really understands the Fund’s characteristics and risk;
3)    The Fund has been offered to the target group of investors via appropriate channel;
4)    The sellers and distributors understand the main characteristics of Fund and the Fund’s target group of investors;
5)    The investors really understands the Fund’s main characteristics and risk before making decision on investment;
6)    The Company continuously monitors the appropriateness of the Fund’s product and performing of duties of the distributors in offering the investment units.

In this regard, the Board of Directors has assigned the Product Committee where the Company’s CEO is the Chairman and the High Level Executives from various working units are the directors of the Product Committee. The Product Committee has the duties and responsibilities to take care of the launch and offering of the Fund in order that the product offering will be appropriate with the group of investors. The Product Committee must be able to monitor, check and evaluate the overview including business risk completely and further makes the report of such matter to the Board of Directors.

The Board of Directors and the High Level Executives have given importance and supported the business operation according to the Product Governance Principle as the core of organizational culture which will help the business to grow sustainably. Further, the Company will be confident on the quality of product launched and offered by the Fund and it will reduce the risk of mis-selling and mis-buying.

2.The Fund’s Product Development

•    The Company has established the appropriate procedure of the Fund’s product development in order that the design and offering of the Company’s product will meet the investors’ need. Moreover, the Company also takes into account the investors’ benefit in terms of product and providing of service. The Company has prescribed the level of the Fund’s risk and complexity, accordingly, the Company will use such information to consider and prescribe the guideline in offering the investment units appropriately. In this connection, the Company has prescribed the target group of investors to whom the Company will launch and offer its investment units as well as the investors who will be considered and approved by the Company. In addition, the Company has prescribed the risk of the new offered fund, for instance, the category of investors, level of acceptable risk, financial status, form of yield, financial limit or condition, investors’ age, investment experience, etc.
•    The Company has provided the Fund’s Product Testing prior to the offering of investment units under various scenarios (Scenario Analysis/Stress tests) which will help the Company to really understand the characteristics and risk of such fund before offering it. In this regard, the Company will be confident that the target group of investors will receive the Fund’s product which can fulfill their need appropriately;
•    The Company has prescribed the appropriate selling channel of each product.

3.The Selection of Distributor of Investment Units Offering and Communication of Information relating to the Fund’s Product

•    The Company has imposed the rule in considering and selecting the distributors and independent selling agents in investment units offering in order to ensure that the distributors will be able to perform their duty in investment units offering appropriately. In this regard, the Company has assigned its Retail Business Development Unit to consider and propose the matter to the Management Committee for consideration and approval;
•    The Company has conducted the distributors due diligence in order to evaluate the readiness and qualifications of the distributors in order to ensure that the distributors will be able to perform their duty in investment units offering and rendering of service appropriately;
•    Retail Business Development Unit has responsibility for the communication process and for giving knowledge to the sellers and distributors in order to ensure that the sellers or distributors will understand the characteristics and risk of the offered fund, as a result, the sellers or distributors will offer the fund to the target group of investors correctly;
•    The Company has its method of communication with the investors where the Company is confident that the investors will have adequate information and they can understand the fund before making the decision on investment, for instance, the preparation of factsheet, prospectus, sale supporting document or any other relevant information in the form which the investors can easily understand, etc.

4.The Monitoring of Appropriateness of the Fund’s Product and Performing of Duties of the Distributors in Investment Units Offering

•    The Company has conducted the review of the Fund’s product  in order to ensure that the product is in line with the details of risk, yield, the target group of investors (Product Review);
•    The Company has continuously monitored the situation, it has also analyzed the impact against the Fund and it also rectified the situation or took any action as appropriate;
•    The Company has monitored performing of duties of the  distributors in investment units offering in order to ensure that the product has been sold according to the need of the target group of investors and such investors understand the product before making the decision on investment;
•    If there is any doubt or it is found that the distributors have inappropriate method of investment units offering or the channel of investment units offering to the target group of investors is inappropriate, the Company will search for the cause and to rectify or to take any action as appropriate;
•    The Company has launched the channel to receive the complaint and it has established the procedure in resolving the complaint by monitoring the progress of the action for resolving the customers’ complaint including the analysis on problem, cause of such complaint.