The Design and Distribution Obligations (DDO) regime will commence in just over a month and, ASIC's promises of a more facilitative approach notwithstanding, the new laws will likely require a massive, coordinated administrative effort from all corners of the financial services industry.
What they won't require, though, is a separate set of distribution obligations for employees of licensees – according to a recent statement from Treasury, this was never an "intended consequence of the regime." The statement accompanies a set of DDO amendments which have been proposed in light of industry feedback.
Along with the clarification regarding licensee employees, these proposed changes:
Treasury's statement explained that these changes are "necessary to clarify the law, to ensure a consistent application of the law, and that the regime remains fit-for-purpose." Given how late in the game – predictably so, at this point – these amendments have been proposed, the Government has requested that ASIC "consider making short-term changes" consistent with the updated rules.
"This will allow the Government time to make these changes permanent," Treasury said, "and will avoid industry needing to implement product governance arrangements, ahead of commencement, for products that are ultimately not intended to be caught by these reforms."
While the clarifying amendments will undoubtedly come as some relief to advice businesses, DDO nonetheless represents a significant challenge for the industry. As Iress chief commercial officer Michael Blomfield explained in his article on the topic, "DDO creates a fundamental shift in how financial products are built and delivered to clients and members" and given that it applies to nearly all regulated financial products in Australia, "it’s difficult to imagine any business or person in this industry who won’t be affected by this legislation."
In that piece, Blomfield argued that because DDO will require "interconnectedness on a scale we’ve never contemplated before," blockchain represents an effective solution. You can read more about it here.
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