New regulations in the financial services industry
The financial services industry shake up continues apace. Next up is the Design and Distribution Obligations (DDO) regime, and this is one of the biggest of the many big new things for the financial services industry.
What must product issuers and distributors do?
Product issuers must:
- make a 'target market determination' for each product covered by the regime;
- take reasonable steps that will, or are reasonably likely to, result in 'retail product distribution conduct' (other than certain excluded conduct) being consistent with the determination;
- notify ASIC of 'significant dealings' in a product in relation to a retail client that are inconsistent with the determination; and
- review the determination regularly and keep records.
- not engage in 'retail product distribution conduct' unless all reasonable enquiries and determination have been made for the product (or that it is not required);
- take reasonable steps that will, or are reasonably likely to, result in retail product distribution conduct in relation to the product being consistent with the determination;
- notify the issuer of 'significant dealings' that are inconsistent with the determination; and
- keep records.
New sets of rules are coming into play. The DDO needs to be properly understood and acted on before the looming deadline of 5 October 2021.