As flagged recently, ASIC released Report 762 Design and distribution obligations: Investment products (REP 762) outlining ASIC’s findings in response to its initial risk-based review of how product issuers are meeting their design and distribution obligations (DDO).
In addition to reviewing target market determinations (TMDs) for compliance with DDO, ASIC reviewed the product design arrangements of 12 issuers of managed investment schemes to check how they met the ‘reasonable steps’ and TMD review obligations.
In the report, ASIC identifies good practices being adopted by issuers as well as areas for improvement, focusing on the following:
While ASIC’s initial review focussed on non-compliance with the TMD requirements, ASIC has made clear it plans to ‘look behind the curtain’. That is, beyond publicly available TMDs, and carry out surveillance work that focusses on issuer’s compliance with the ‘reasonable steps’ obligation. ASIC says it will consider regulatory action where necessary.
Based on ASIC’s comments and key findings, we have prepared this DDO Health Check to help you assess your TMDs and product governance arrangements against ASIC’s current view of DDO good practice.
DDO has been operational for the last 18 months or so and issuers now have the benefit of further guidance from ASIC to make improvements and adjustments to TMDs and product governance arrangements to reflect good practice. Based on ASIC’s latest report we have identified minor improvements around the following which we would like to share with our clients:
Reach out to our team to discuss and incorporate these improvements into your TMDs and DDO policy and plans.
We offer a full spectrum of DDO services, from advice on documents you prepare to a comprehensive in-house review of the implementation of DDO into the operations of your business. Our services are tailored to your business needs and include the following—
Contact Sean McMahon, Jeunesse Meldrum, or a member of our Funds Management team to understand what you need to do next.