On 5 October 2021, the Design and Distribution Obligations (DDO) went live across the Australian financial services industry. The regime introduced targeted and principles-based obligations in relation to the design and sale of financial products. DDO has led organisations to re-think the way products are developed, distributed, governed and monitored. Six months post go-live, it is important for organisations to now consider post-implementation reviews to support ongoing compliance with DDO.
On 3 March ASIC Chair, Joe Longo, addressed ASIC’s corporate governance priorities and the year ahead at the Australian Institute of Company Directors Australian Governance Summit. He identified that early reviews ASIC had conducted of target market determinations highlighted a disappointing approach but flagged some positive improvements across the industry in response to ASIC’s observations.
Mr Longo reiterated that the purpose of DDO was to help consumers obtain appropriate financial products by requiring organisations to design products that meet the needs of consumers and direct distribution towards the intended target market. Mr Longo noted that ASIC wanted to see long-term benefits of DDO realised for consumers.Mr Longo concluded that ASIC considers the industry is reaching a point where it has had sufficient time to bed down its implementation of the DDO regime. He outlined that ASIC will be expecting compliance with the regime and will be pursuing a targeted surveillance approach across 2022, warning it will move to enforce the obligations where necessary. As such, organisations should now consider how they have implemented DDO and ensure they have prepared adequately for the inevitable scrutiny that is coming.