Almost a year after the release of its draft regulatory guide, ASIC has released its final guidance (RG 274) on the Design and Distribution Obligations (DDO). This explains the regulator’s interpretation of the requirements, expectations for compliance and general approach to administering the obligations. With issuers and distributors set to be caught by the regime in under a year, from 5 October 2021, the industry has breathed a collective sigh of relief that the guidance has remained materially unchanged.
Below we have set out the key considerations for banks.
What does this mean for banks?
While the guidance has not materially changed, it does reaffirm ASIC’s position on DDO implementation, and its expectation of how banks will manage DDO in a BAU environment. We anticipate that DDO programs will be accelerated in the new year, as issuers and distributors continue to grapple with the organisational-wide impacts of this product governance overhaul.
Given ASIC’s acknowledgement on the standardisation of certain DDO components, for example content and form of TMDs, information sharing with distributors and reporting periods, we expect to see industry groups leveraged as a vehicle to achieve this.
On the whole, a substantial amount of work still needs to be undertaken in readiness for 5 October 2021.