Regulatory Alerts2024-12-03
Guideline on Scenario Analyses from a Customer Perspective
The Dutch Authority for the Financial Markets (AFM) issued this guideline to clarify how financial product developers and co-developers must conduct scenario analyses from a customer perspective within the Product Approval and Review Process (PARP). It requires enterprises to systematically evaluate how products perform under various market and life-event scenarios, ensuring that costs, risks, and outcomes align with the target group’s objectives rather than solely the company’s profitability. The document provides practical steps, methodological guidance, and sector-specific examples to help firms prevent foreseeable customer disappointments, mitigate misselling risks, and adjust product features, target groups, or distribution strategies accordingly.