Advisers need certainty of DDO nil reporting extension

Mike Taylor

Managing Editor and Publisher

22 August 2023

The Government’s intended changes to the Design and Distribution Obligations (DDO) reporting requirements under the Corporations Act are likely to take so long that extending there is a need to extend the current DDO nil reporting exemption until October, 2028.

The Australian Securities and Investments Commission (ASIC) has been told that in the absence of the nil reporting exemption relief provided in 2021 the cost in time and money to the advice sector would have been significant and provided no value.

The Stockbrokers and Investments Advisers Association has told ASIC that its members distribute products such as exchange traded funds (ETFs) and managed funds from hundreds of issuers while receiving very few complaints about the products.

“SIAA members receive very few complaints about these products. Without the relief from the nil complaints reporting requirement, our members would have been required to send many hundreds of ‘nil complaints’ reports every quarter,” it said.

“Before the original relief was provided in 2021 our members were telling us that the work involved in setting up a system to communicate these reports to issuers was proving to be costly and burdensome.

“As a result, SIAA advocated for a change to the DDO regime to exempt distributors from the requirement to lodge nil complaints reports, as it imposed a significant and unnecessary regulatory burden upon them without providing any benefit to issuers or consumers.
the SIAA submission said.

It said that the SIAA had been mindful of the looming expiration date of the nil reporting relief and noted that the Quality of Advice Review (QAR) final report had recommended amendments to the DDO reporting requirements to remove the requirement for relevant providers to report to the product issuer where no complaints had been made.

“However, while the government has accepted the recommendation to amend the DDO reporting requirements in the Corporations Act, we acknowledge that changes to the Corporations Act are unlikely to be made before the expiration of the current relief and we agree that it is necessary to extend the operation of the instrument to retain certainty for industry ahead of any law reform,” the SIAA said.

“Accordingly, we strongly support the extension of the expiry of the instrument until the start of October 2028.”