Posted: 22 Oct. 2020 05 min. read

Gearing Up for DDO

How are investment and wealth managers progressing?

There is now less than 12 months until the Design and Distribution Obligations (DDO) regime commences on 5 October 2021. Deloitte recently held a DDO webinar for wealth and investments organisations and surveyed participants to understand and discuss the challenges the regulation is posing and how they are progressing with their implementation programs. In this blog we set out the results from that discussion and look at some of the key issues organisations will need to resolve.

How advanced are your organisation’s DDO preparations?

The majority of respondents (96%) have either not started their DDO implementation programs or are at the early, initial scoping stage. Compared to our observations of the banking and insurance sector, it appears that the wealth and investments sector is lagging behind the large banks and insurers. This is understandable given the more diverse product sets in those sectors. However, with less than 12 months to go, organisations will need to be efficient to ensure their programs are complete by the implementation deadline.

What areas of DDO present the biggest challenges?

Developing a TMD methodology is the biggest challenge currently facing wealth and investments organisations which reflects the early stage of most implementation programs. Communication and information-sharing arrangements between issuers and distributors also ranks highly. A significant majority (89%) of respondents have not had any discussions with third parties to agree an information-sharing approach. However, 54% plan to either use an industry-wide template (or leverage one as part of their own approach) to produce their TMDs and share information, which may make the process of reaching agreements more straightforward.

Unsurprisingly, data requirements for establishing review triggers was one of the biggest areas of concern and progress on accessing the data needed was split between respondents. Organisations should look to leverage existing data points where possible (for example liquidity metrics, investment performance and rates of switching between investment options will likely all be monitored at the moment and can be used to inform a view on whether a product is meeting investor needs and objectives).

Overall, based on our survey results, there appears to be a significant amount of work for investment and wealth managers to complete in order to be compliant by 5 October 2021. There are a number of sector-specific issues such as treatment of investment options, understanding what constitutes reasonable steps for sales through platforms and resolving information-sharing between issuers and distributors that will need to be worked through. If not already, organisations should start looking to these issues now to avoid leaving them to the last minute and being forced into adopting inefficient, tactical solutions.

Visit our DDO homepage.

More about our authors

Rosalyn Teskey

Rosalyn Teskey

Partner, Audit & Assurance

Rosalyn is a partner in Deloitte's Melbourne office in the Governance, Regulation and Conduct practice. She specialises in supporting firms to design and assess frameworks to treat customers fairly, including the development of conduct, product governance, sales practices and complaints handling frameworks.

​Sweta Shivdas

​Sweta Shivdas

Partner, Audit & Assurance

Sweta is an Analytics Partner in Audit & Assurance. She leads the charge on applying Artificial Intelligence (AI) in our client solutions - helping them make better data-enabled decisions, improve quality, speed and functionality and ultimately driving revenue growth. She has also enabled the A&A Analytics team to deliver innovative solutions across a range of client issues and industries. Sweta is passionate about the advancement of women in business. She is a strong advocate of work agility, balancing works with looking after her two boys.

Simon Thorpe

Simon Thorpe

Director, Audit & Assurance

Simon is a Director in Deloitte’s Investment, Wealth and Treasury team. He specializes in working with clients to implement regulatory change, develop risk management frameworks and improve the efficiency and effectiveness of Compliance functions.