The Australian Securities and Investments Commission (ASIC) has been strict in monitoring compliance with the new product design and distribution obligations (DDO), which were introduced on 5 October 2021. Under these DDO obligations, issuers are required to design financial products to meet consumer needs and distribute their products in a clearly-defined, targeted manner.
To date, seventeen DDO interim stop orders have been issued by ASIC. Nine interim stop orders have been lifted after ASIC's concerns were addressed by the entities or where the products were withdrawn, and six remain in place.
ASIC has made interim stop orders on target market determinations (TMD) after deeming them to be deficient for various reasons, including:
ASIC's reasons for making these interim orders are generally to prevent poor conduct and protect retail investors from investing in a financial product that may not be aligned with their financial needs, situation or goals.
Arising from ASIC's DDO obligation enforcement, financial product issuers should:
Feel free to reach out to any of the lawyers named in this alert or your usual contacts at Baker McKenzie with any queries you have about the compliance and risk management regimes required by the financial services laws and any improvements on processes your business may need.
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