Design and distribution obligations
The Design and Distribution Obligations (DDOs) commenced on 5 October 2021. There are reporting and record-keeping obligations under the DDO regime that apply when you provide personal advice.
The Australian Government introduced the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2019 (Product Regulation Bill) into Parliament in September 2018. The Product Regulation Bill introduced two key reforms in financial services:
- a product intervention power for ASIC; and
- a new governance regime for the design and distribution of financial products (design and distribution obligations or ‘DDOs’).
The Government introduced these reforms in response to the FSI’s recommendations. The FSI recommended that ASIC should have a product intervention power, so that we could temporarily intervene when there is a risk of significant consumer detriment. The FSI also recommended the introduction of principles-based design and distribution obligations. These obligations would require financial product issuers and distributors to consider a range of factors when designing products and setting distribution strategies.
While you are exempt from meeting core obligations under the DDO regime when providing personal advice, including the “reasonable steps” obligation, there are reporting and record-keeping obligations under the DDO regime that apply when you provide personal advice.
These obligations include reporting to the product issuer:
- information about the number of complaints an adviser has received about a product;
- any information that the product issuer specifies in the target market determination to promptly identify a ‘review trigger’ or another event or circumstance that would suggest a Target Market Determination (TMD) is no longer appropriate; and
- significant dealings in a product that are inconsistent with a product’s TMD.
You must also keep records in relation to personal advice you have provided on a product, including but not limited to information about complaints and ‘review triggers’.
For more information, see:
