The Design & Distribution Obligations
Are you DDO and PIP ready?
Products that will be affected include financial products to retail clients such as insurance, asset management, and derivatives.
If that includes your business, you will need to review your policies and procedures, and product approval processes are likely to need updating and amending. You will also need to ensure you have appropriate monitoring and operational controls.
The DDO obligations
The distribution obligations applicable to distributors include requirements to:
- Not engage in retail product distribution without a target market determination;
- Not engage in retail product distribution where a target market determination may no longer be appropriate;
- Take reasonable steps so that distribution is in accordance with the target market determination;
- Collect, keep and provide distribution information; and
- Notify the issuer of any significant dealings inconsistent with the target market determination.
Simple steps to manage your DDO with Pali
- Set up a DDO Risk and related information and add it to the Risk Register.
- Define a series of Compliance Duties to ensure understanding and adherence to the DDO obligation, link these Duties to the DDO Risk, and allocate responsibilities for Duty Compliance.
These Duties could include, for example:
- Ensuring receipt of latest Target Market info from Business Partners.
- Ensure communication to and observance from Sales and Marketing Teams.
- Audit of customers to ensure compliance within Target Market guidelines.
Pali can manage the workflow, timing and records of compliance and, as required, escalation of the Duties. Any Incidents, Complaints and Breaches can be logged within Pali per the appropriate Register and these can be linked back to the respective Compliance Duty - along with Action Plans created for resolution.
Reporting is available at all levels for each of these Registers and activities.
Please contact us for more information.
Having a robust product governance framework and product monitoring capability embedded across your organisation are critical. Your organisation needs to assess the implications of DDO and PIP on the end-to-end product lifecycle and the related operational processes.
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