Financial advisers are now coming to a point where they need to rapidly wrap their minds are the design and distribution obligations coming in to force on 5 October, 2021, according to the Association of Financial Advisers (AFA).
With the raft of regulatory change that has come in this year so far, AFA general manager for policy a professionalism, Phil Anderson said prior to now, advisers were not in a position to deal with DDO.
Pointing to the Australian Securities and Investments Commission (ASIC) FAQ on DDO specifically for advisers and licensees that was released on Thursday, Anderson said it would be a useful document for advisers to read.
“DDO is an area that advisers haven't had a perception that they needed to dive into it until this point. Now that there's a lot of information that's coming in, including from product issuers, they are all of a sudden finding themselves in a position where they need to rapidly wrap their minds around it,” he said.
“So, it's certainly a challenging period is, as people come to terms with exactly what it is and exactly what they need to do to comply with it.”
The DDO regime was set to start in under three weeks and Anderson stressed that advisers needed to understand the considerations needed for target market determinations when they were providing advice.
“The advice that they provide from the fifth of October onwards will need to consider the target market determination and that may be because its ASICs view that's implicit in complying with best interest duty, but also, because the product providers may have a requirement that they collect information on dealings that are outside of the target market determination,” he said.
“The obligation to do that – to capture that information starts from the fifth of October – they do need to understand what the obligations are, before they get to the fifth. And if the target market determination influences the products that you recommend, then you do need to understand the target market determinations for any product that you deal with from that point onwards.”