ASIC today released the anticipated Report 762 Design and distribution obligations: Investment products (REP 762) which outlines the findings and actions taken by ASIC in response to its initial risk-based review of how product issuers are meeting their design and distribution obligations (DDO).
BACKGROUND
The new DDO regime commenced in October 2021, and since July 2022 ASIC has placed interim stop orders on 26 investment products from 18 issuers for alleged target market deficiencies, including for the following-
- target markets defined too broadly
- unsuitable investor risk profiles
- inappropriate levels of portfolio allocation
- unsuitable investment timeframes and withdrawal features not reflecting a product's risks and liquidity profile.
WHAT DOES IT MEAN FOR YOU?
The funds management industry has been eagerly awaiting further clarification and guidance from ASIC on DDO, which is a principles-based regime that applies to the full spectrum of financial products available for issue to retail clients.
We are considering the contents of REP 762 in detail and over the coming days will be in contact with our DDO clients individually to share insights from the Report that are relevant to their products.