With the Design and Distribution Obligations regime due to commence in October 2021 for financial services firm, the Financial Services Council is supporting adoption of consistent standards across the industry.
A statement from the council explains that the Design and Distribution Obligations (DDO) regime is a “…significant new consumer protection legal framework … aimed at ensuring consumers are not sold unsuitable financial products”.
It says that to lessen the compliance burden and cost that will be borne by companies, advisers and consumers, the FSC is supporting adoption of consistent standards across the industry.
“To this end, the FSC and its members have developed two components – templates for Target Market Determinations (TMDs) and industry data standards – for the funds management, superannuation, investment platforms and life insurance sectors.”
FSC CEO Sally Loane says that the FSC’s goal of developing the TMDs and data standards over the past 12 months was to assist alignment and efficiency for both issuers and distributors of products under the DDO regime.
…the DDO regime requires financial product issuers to identify a target market for each of their products and share information with third parties, including financial advisers…
“The DDO regime requires financial product issuers to identify a target market for each of their products and share information with third parties, including financial advisers, to understand the consumers who have purchased their products,” she says.
“Standardisation of information and data is important to the success of the DDO regime. Given the potential for complexity – and associated cost – from hundreds of different templates and data standards, the FSC has developed templates which will assist companies write TMDs for the products they issue.”
Loane notes too that the FSC data standards will also assist alignment and standardisation and facilitate the necessary flow of data between financial advisers, platforms and product issuers.
She thanked ASIC for the supportive role the regulator is taking to help the industry comply with the DDO regime. “ASIC is providing helpful guidance, particularly as the FSC and the financial services industry consult with them on the design and content of our template TMDs.”
The FSC will be making data standards universally available free of charge. The TMD templates will be licensed to non-FSC members.
Click here for more information on the reforms and the FSC’s template TMDs and data standards.
