ASIC spells out what advisers need to do from October

Alex Burke,  Senior Writer,  No More Practice Education

Last week, we discussed the results from our recent survey which suggested that the majority (40%) of our community is unsure as to what impact DDO will have on the advice sector, while just over a quarter (26%) believe there will be major ramifications. 

Despite being just a few weeks away, the DDO regime still clearly isn't widely understood. And it's easy to see why: not only will it require an unprecedented level of connection, communication and record-keeping throughout financial services (see Michael Blomfield's piece on why that is the case) but it's now been amended multiple times

ASIC, which has been tasked with making short-term changes consistent with the Government's proposed DDO amendments, has attempted to allay some of the confusion surrounding the new laws with an information sheet for financial advisers. You can read the full thing here, but we'll briefly outline what the regulator expects from the advice sector once the regime kicks in on October 5th. 

Advisers' obligations

Under the DDO rules, both issuers and distributors of financial products must take reasonable steps to ensure a product is distributed in accordance with its target market determination (TMD). However, crucially, advisers and licensees are exempt from the "reasonable steps" obligation when providing personal advice to a client. 

ASIC noted that this exemption only applies to personal advice; if general advice or execution-only services are being provided, the reasonable steps obligation must be met. 

Record-keeping

Advisers and licensees will need to report three broad categories of information to product issuers: complaints about the product (including the number of complaints), significant dealings in the product that aren't consistent with the TMD and any information that would assist the issuer in determining that the TMD is no longer appropriate. 

Other information may also need to be provided depending on the product's TMD. In any case, all of this information will need to be retained for up to seven years.

If you'd like to get a legal perspective on complaints and DDO, along with ways you can get support dealing with the new laws, you can sign up for a free webinar here. Please note: the webinar will take place tomorrow (23/09/21) at 12pm. 

 


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