Subscribe to receive our latest Risk and Compliance Insights and Research as they become available.
New Design and Distribution Obligations
It’s one thing to set up all the elements that deliver change, but often the real challenge is to effectively manage these elements proactively and sustainably over time. It’s not only important to have prepared well for the Design and Distribution Obligations (DDO), but also to have put in place the ongoing management and execution to ensure continued compliance. After all, compliance is a journey, not a destination.
Training and enablement
Those who are accountable need to have a clear awareness of their ongoing responsibilities and must be provided with the necessary training and sufficient resources to manage the complexity of execution.
Accountability doesn’t just lie with those responsible for governing. Everyone involved in the product lifecycle has a part to play in meeting the obligations. Ensuring your people undergo DDO specific training on a regular basis and have access to good guidance through policies and procedures is essential.
Designing a Target Market Determination (TMD) is not set and forget. As an issuer, you are responsible to make sure each product’s TMD requirements are met over the whole product lifecycle. You must take ongoing steps to capture specific information and adhere to a review cycle in order to identify when a TMD may no longer be appropriate.
Where you work with third-party distributors, it is important that you communicate clear expectations to them. Do they have a clear understanding of their responsibilities, including what information they are required to share with you, the mode of sharing that information via standardised documentation, and the reporting timeframes in which they need to comply? How do you get comfort that they are doing all they need to do to enable you to meet your obligations?
Monitoring and reporting are not just for the purposes of having an audit trail, but more importantly, so that results can be analysed to measure performance and determine what actions (if any) are needed to improve. In measuring performance against the DDO you will need to have defined quantitative and qualitative metrics that allow you to identify if and when corrective action is needed and what such action will need to achieve.
It is important to ensure your organisation has not only put in place the tools required but that all involved know the role they play and, in particular, are set up to meet the very tight timelines for undertaking their relevant tasks. DDO done well will, beyond meeting compliance obligations, provide opportunities to improve product management discipline and deliver improved financial outcomes.
Some of the reporting timeframes you’ll need to meet:
|What?||By whom?||To whom?||When?|
|Supply Complaints and other information specified in the TMD||Distributor||Issuer||Within 10 business days, after the end of the relevant reporting period|
|Report "Significant dealings"||Distributor||Issuer||Within 10 business days, after becoming aware|
|Notify re: "Significant dealings"||Issuer||ASIC||Within 10 business days, after becoming aware|