DDO changes coming 5th of October, 2021. Are you ready?

What is DDO? And why was it created?

DDO stands for Design and Distribution Obligations. From 5 October 2021, DDO has been introduced to Chapter 7 of the Corporations Act. The new obligations are intended to help consumers obtain appropriate financial products by requiring issuers and distributors to have a consumer-centric approach to the design and distribution of products.

Issuers of financial products (that’s us!) are required to ensure products are designed to meet the needs of consumers for whom the product is designed/intended for and distributors (that’s you!) will need to ensure they’re being recommended to consumers who are in the target market which has been defined / set out by the issuer.

What will change as a result of DDO? Introducing the Target Market Determination.

From 5 October 2021, all products we issue which are designed for retail clients will need to have a Target Market Determination prior to the product being distributed. The TMD outlines the key features of the product, the intended consumer for the product, how the product might meet the needs and objectives of a consumer in the target market, and an outline of how and when we will review the TMD.

There is also a requirement for all product issuers to collect data from distributors in order to monitor product distribution is being undertaken inline with the TMD.

What information does Integrity need to collect? New adviser responsibilities.

Good news, we already collect most of the information needed to regularly assess whether changes are required to the design of our products so we can better meet the needs of the target market. Our Distributors will need to provide us with information about:

• Any product related complaints; and

• Any other information we specify in the Target Market Determination. 

Distributors are also required to notify us of any significant dealings which are inconsistent with the Target Market Determination, within 10 business days. Integrity will be providing a final copy of TMDs to our Distributors by 1 September 2021

What about a product sold under general advice?

As part of the application process, Advisers will be asked to identify whether the product is being sold under personal or general advice. This information will assist us gain insight into consumer outcomes and whether the TMD remains appropriate on an ongoing basis.

For Distributors, their DDO obligations vary depending on whether they provide general or personal advice to their clients. We recommend you speak to your compliance team about your responsibilities here.