A major nuisance for advisers has been stripped from the upcoming design and distribution obligations (DDO) set to begin on 5 October.
Following feedback from the industry, the government will scrap the requirement for financial advisers to report “nil complaints” to product issuers.
Under the legislation underpinning DDO, financial advisers and licensees who are distributors of financial products were required to report complaints in writing on a regular basis to product issuers. This also included submitting a “nil complaints” report if no complaints about the product were received.
But ahead of the 5 October DDO start, the Treasury has updated the regime, noting the removal of nil complaints requirements.
In applauding this major development, the Stockbrokers and Financial Advisers Association (SAFAA) referred to the “nil complaints” requirement as “a significant and unnecessary regulatory burden placed on distributors from which issuers would not gain any benefit”.
“Both distributors and issuers can now focus on complaints, rather than the fact that no complaints have been received in relation to particular products,” SAFAA CEO Judith Fox said.
She drew attention to the number of issuers stockbrokers and investment advice firms distribute products from, including ETFs, TraCRs, warrants and mFunds.
“Each of these issuers has multiple products, resulting in many hundreds of ‘nil complaints’ reports needing to be sent every quarter, as SAFAA members receive very few complaints about these products,” Ms Fox said.
“The work involved in setting up a system to communicate these reports to issuers was proving to be costly and burdensome.”
Last month, the Treasury announced a number of amendments to the DDO framework in response to industry feedback, which included a clarification of the product types exempted from the obligations — margin loans to corporates, foreign cash that is settled immediately, and non-cash payment facilities such as credit and debit card facilities.
The amendments also made clear that employees of licensees are not subject to their own separate set of DDO obligations, and that 31-day term deposits are included in the regime.
The Treasury at the time confirmed ASIC would provide temporary relief giving effect to the government’s policy intention for the changes until the legislative amendments were passed.
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