DDO Update - ASIC's Express Investigation
by Leica Ison
ASIC Deputy Chair Karen Chester gave an address at the AFR Business Summit 2021 earlier this March and spoke about ASIC's new approach to enforcement.
Here are some of the Key takeouts in relation to the Design and Distribution Obligations:
ASIC will adopt a 'lighter but more impactful', approach to enforcement, based on cooperation. The new approach will focus on addressing harmful misconduct rather than 'process breaches'. ASIC is looking to maintain a balance between incentivising good conduct and taking swift conduct against misconduct.
ASIC's new enforcement approach: 'Express Investigation'
ASIC's new 'express investigation' means that concerns are set out early to the entity investigated. The regulatory body will then seek regular and consistent engagement to try and reduce the time and expense of the investigation.
ASIC will look to improve compliance rates on notices to produce documents and information; and on the voluntary provision of information to assist with understanding of the conduct at issue.
In some instances, the EI pilot led to agreement on facts and admissions on liability, which saved time and the expense of a contested trial.
Going forward, ASIC plans to work with firms and the Australian Banking Association to share respective methodology on how to measure the benefits of Express Investigation.
On ASIC'S Design and Distribution Obligations (DDO) pilot program:
Ms Chester said that ASIC will launch a DDO pilot program, starting with Buy Now Pay Later (BNPL) firms. Meetings will be held with CEOs and Boards of 'regulated cohorts', where ASIC considers that DDO could prevent current and future harm.
ASIC's Express Investigation means it's essential to have quick access to one source of the product lifecycle and its entire history. We know most companies do not have those structures and processes in place for that at the moment. Searching through emails and share drives is probably not the most efficient way to do this. Skyjed has the Express Design and Express Audit features to support ASIC's EI. Contact us to find out more
The BNPL entities have proven they can innovate product business models to meet customer needs. All eyes are on them at the moment. The next big evolution is leading the industry in monitoring and iterating a product lifecycle to meet rapid customer and regulatory changes. We expect that BNPL might be innovation leaders again in adopting regtech for product governance. The recent Productivity Commission Report into Regtech flagged the benefits to small business and range industry sector.
Ms Chester flagged that industry should expect a number of new non-Hayne Commission related superannuation actions.
3 main 'misconduct' themes identified
- Trustee competence and oversight
- Complaints handling processes
- Mischarging fees.
New complaints handling requirements will come into effect on 5 October 2021 alongside DDO.
The Skyjed product lifecycle management and governance platform provides organisations with a 360-degree view of their product portfolios health and risk status while facilitating collaboration, transparency and product trust in the day to day operations of the organisation.
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