ASIC is inviting industry feedback on a proposal to extend the operation of the ASIC Corporations (Design and Distribution Obligations Interim Measures) 2021/784 instrument for a further five years.
The instrument was initially made for a period of two years and implements measures announced by Treasury. These include relief for distributors from the obligation to report to product issuers if they received nil complaints during a reporting period.
ASIC intends to extend the operation of the instrument to retain certainty for industry ahead of any law reform.
ASIC assessed that ASIC Instrument 2021/784, is operating effectively and efficiently, and continues to form a necessary and useful part of the legislative framework.
The only changes proposed are to:
- extend the expiry of the instrument until the start of 5 October 2028; and
- to remove an exemption for cashless welfare arrangements that is no longer necessary following the making of the Corporations Amendment (Design and Distribution Obligations – Income Management Regimes) Regulations 2023.
These amendments should not have a substantive effect on the operation of the instrument.
ASIC is seeking feedback on the proposal, including whether any amendments to the instrument are required. Submissions should be sent by 25 August 2023 to product.regulation@asic.gov.au.
Background
The design and distribution obligations (DDO) require firms to design financial products to meet the needs of consumers, and to distribute their products in a more targeted manner. The obligations were passed by Parliament in 2019 following a recommendation of the Financial System Inquiry and firms were required to comply from 5 October 2021.
Leading up to the commencement of DDO, Treasury received feedback from industry stakeholders on implementing the requirements. They announced the Government’s intention to make a number of amendments to achieve the intended operation of these reforms in response to industry feedback. ASIC made the instrument to give effect to the Government’s policy intention in the interim period before legislative changes are made.