FPA questions DDO ‘fit-for-purpose’

There should be design and distribution obligation (DDO) relief for financial planners providing personal financial advice to retail clients, the Financial Planning Association (FPA) of Australia believes.

The FPA’s submission on the DDO regime that comes into force on 5 October, 2021, said the reporting and record keeping requirements in the DDO regime looked at product regulation from the product perspective and the potential risk/harm posed to retail clients, as identified under the total market determination (TMD), as a whole.

However, when providing personal advice, planners considered the appropriateness of each product recommendation in relation to the individual client’s circumstances and as one part of that client’s broader financial plan.

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“We are disappointed that it does not address the unnecessary and unworkable record keeping and reporting obligations the DDO Act places on financial planners,” the FPA said.

“…Applying the DDOs to planners ignores the higher standards of the financial advice regime and brings into question whether some elements of the regime are fit-for-purpose. For example, the application of the DDOs to financial planners ignores the requirement that planners must ensure their advice must be appropriate for them. This is a higher standard than the aim that products are ‘likely to be’ appropriate for consumers.”

The FPA said as a planner’s product recommendation was based on the client/product assessment and not the product TMD, the client might fall outside the issuer’s target market for that product.

“Hence, reports from financial planners about whether a product presents harm or risks to consumers invested outside the TMD will likely taint the data about the product,” it said.

“Imposing additional reporting and record keeping requirements that do not naturally ‘fit’ in existing advice processes and reporting, would create an additional onerous administrative burden for planners as the conclusions a planner draws about the risks and appropriateness of a product will differ based on each client’s circumstances.”

The FPA requested the corporate regulator be directed to make a notifiable instrument that:

  • Exempted financial planners who provided ‘excluded conduct’ and ‘excluded dealings’ from sections 994F(3)(b), 994F(c), and 994F(6) of the DDO Act – the obligations to report to the product provider (and associated record keeping requirement):
    • The “reasonable steps the regulated person has taken to ensure consistency with the target market determination”;
    • Information specified in the TMD; and
    • A ‘significant dealing’ that was not consistent with the TMD.
  • Restricted product providers ability to impose additional requirements on ‘excluded conduct’ and ‘excluded dealings’ via sections 994B(5)(h), 994F(5) and s994F(c), thereby obviating their responsibilities by passing them on to financial planners.

The submission noted the regime did not take into account the fact that planners considered a much broader set of facts about each client, as required under the law.

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The FPA would be late for their own funeral, the DDO is in from Oct 5, and has been known about for months.


It really is like they just put this stuff out when they know its too late just to make it look like they 'tried'.

They need to be on the front foot well before this point to have a chance to change it.

Most planners do not realise how onerous these record keeping requirements are. Many companies want reporting on every single product on a quarterly basis... Its untenable.

yep, these obligations are not well understood. it's gonna blow up financial planning.

Yes, say 10-12 Managed Funds or ETF"s or whatevers in a portfolio, times by a couple of hundred portfolios. It is herding people to Multi-Manager single manager solutions. The banks and the big super funds have orchestrated perfectly and Frydenburg etc love it, and will have jobs in the big end for the rest of their lives. Josh will chair the Future Fund or something similar, and all down the line the players will be rewarded. MDA's are caught too I believe.

that's why so many planners have left. IT"S GONNA BLOW. KABOOM!!!

Frydenberg, Hume & ASIC strike yet again.
We want to Advice more Affordable=
Out with Frydenberg you Dictator.
Out without Hume you Puppet.
Clean out Corrupt ASIC

Yes but the shifting of responsibility has been a very recent affair. If you are in doubt that product manufacturers are shifting responsibility for their products onto planners - in recent weeks we have had four different insurers / super trustees unilaterally change the T&Cs in the agreement our AFSL holds with them to transfer much of their responsibility to us. Some of the new obligations being quietly added into these "agreements" are outrageous. It's like drug companies making the doctors who prescribe their products legally responsible in case the drug causes harm. Does the doctor have to visit the drug factory to check quality standards or oversee the R&D? The best interests duty is a much higher standard on planners - it's time for the executives of financial product providers to take some accountability, to actually earn their excessively big dollars, and not try and throw planners under the bus yet again. This legislation was intended to be targeted at product providers not planners so the FPA is right to push back aggressively. PS In case any of said execs from AMP, MLC Life, TAL, or Challenger are reading this - your unilateral agreement changes will be at the forefront off my mind every time I look at a client file and find myself making a recommendation!

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