As organisations navigate through the final stages of DDO preparation before go-live on 5 October 2021, defining the approach to third-party distribution has proven to be a challenge for issuers of financial products.
Under Regulatory Guide 274 (RG 274), issuers must take reasonable steps to ensure that products are sold to their intended target market. Where products are sold to consumers through third-party distributors (including financial advisers), issuers of the product must specify what information these third-party distributors should provide to issuers, and how often that information should be provided.
The management of third-party distributor relationships plays a critical role in the success of an issuer’s ability to comply with its obligations under DDO. The challenge currently facing issuers is how best to balance complying with their reasonable steps obligations under DDO, while adopting a practical and commercial approach.