DDO implementation a challenge for trustees

Superannuation trustees are experiencing challenges in applying the design and distribution obligation (DDO) legislation when it comes to product definitions compared with an investment option, according to a roundtable.  

The roundtable held by the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) with 11 super fund chief executives found many CEOs found DDO had prompted them to consider how to better match product design and member needs.  

The trustees also had issues around how the MySuper exemption applied in practice and whether clearing houses were capture or exempt under DDO. 

ASIC encouraged trustees to take “a holistic approach to the DDOs, noting that there can be benefits in applying this thinking across all their products”.  

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“This is particularly the case where products share key features such as insurance. ASIC confirmed that clearing houses are caught by the DDOs, but welcomed views from the industry on this. ASIC will continue to communicate with industry on the various issues raised by the implementation of the DDO requirements.” 

The roundtable also found there was a desire from the CEOs for consistent and richer data to be provided more frequently by APRA. Measuring member outcomes was raised and whether there was a future for the use of risk-adjusted returns to account for different investment strategies. 

The two regulators said there were opportunities to work with the industry on data governance and management.  

“APRA is currently transforming its data collection and working closely with ASIC and the industry on this project,” they said. 

“It was noted that measurement of member outcomes is an area of ongoing development and APRA and ASIC are keen to work with the industry to refine measures over time.”