The Product Launch With No Paper Trail
A digital bank plans to launch a "flexible savings" product in three weeks. The product pays a promotional rate for six months, then reverts to a lower rate, and includes a feature that automatically sweeps idle balances into a partner fund. Marketing has drafted materials describing the product as "high interest, always." The product approval file contains a business case and a pricing sheet but no customer outcomes assessment, no review of the sweep feature's risks, and no plan for communicating the rate change. The partner fund is not described in the draft terms. The compliance team was copied on two emails but not asked to approve. The launch date is driven by a competitor's announcement, and the CEO has said the bank "cannot afford to miss this window."
1. Identify the regulatory, conduct, and customer-protection risks in this launch.
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Misleading marketing. "High interest, always" is inaccurate given the six-month reversion. A promotional rate described as permanent is a misleading financial promotion and a likely breach of fair-marketing rules. The claim must be corrected before any material is used.
Undisclosed sweep and third party. Automatically moving balances into a partner fund is a material feature. Customers must understand where their money goes, the partner's identity, the risk profile, any fees, and whether deposit protection applies. Omitting the partner from the terms is a serious disclosure failure and may affect the product's regulatory classification.
Rate-change communication. No plan exists to tell customers the rate will fall. Customers who opened on the promotional basis may be harmed if the change is buried or unannounced. Clear, timely notice is required.
Product governance. The approval file lacks a customer outcomes assessment and a review of the sweep feature. The product was approved on commercial grounds alone, which inverts the required order: identify the target market, assess the risks to customers, then decide whether to launch.
Compliance bypass. Copying compliance on emails is not approval. Launching without sign-off is a control breach.
Pressure. The competitor-driven deadline and CEO statement create pressure to skip controls, which is itself a conduct risk signal.
2. Advise the CEO on whether to launch in three weeks, and set out the conditions for launch.
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Recommendation. Do not launch on the current timetable. The issues are fixable, but not by skipping the controls that exist to catch them. A short delay is far cheaper than a mis-selling finding, redress, and reputational damage.
Conditions for launch.
- Rewrite all marketing to state the promotional rate, its duration, and the rate after reversion, with equal prominence.
- Disclose the sweep feature and the partner fund in the terms and key information document, including risks, fees, and protection status.
- Build and test a rate-change notification process with defined timing and channels.
- Complete a customer outcomes assessment covering target market, foreseeable harm, and vulnerability.
- Obtain formal compliance and risk sign-off, recorded in the approval file.
- Set post-launch monitoring: complaints, opt-outs from the sweep, and comprehension testing of materials.
Governance. The decision to launch should be minuted with the conditions attached. If the CEO wishes to proceed earlier, the request and the residual risks should be documented and escalated to the board or its delegate, not resolved informally.
Tone from the top. The CEO's framing matters. Treating the deadline as a reason to waive controls signals to staff that speed outranks compliance; treating it as a reason to work faster within the controls signals the opposite.