Product Design & Distribution Obligations

Description

Product design is a blended process of conceptualising, developing and creating products that solve an existing user problem in a given industry.

The term product design originated from industrial design, a practice focusing on a product’s appearance, functions, and utility to the end user. Now, this also applies to tangible and digital/virtual products. Products designed through this process take into account the end-user profile and are fine-tuned for consistent performance in the market.

The Financial System Inquiry (FSI) recommended the introduction of the design and distribution obligations in 2014 based on an acknowledgment of the limitations of a framework for consumer protection in financial services that relies heavily on disclosure, financial advice, and financial literacy. FSI concluded that “disclosure can be ineffective for a number of reasons” and that ‘disclosure alone is unlikely to correct the effect of broader market structures and conflicts that drive product development or distribution practices’ that result in poor consumer outcomes. Over a number of years, ASIC has also identified limitations to disclosure in retail financial services markets.

This course is based on regulatory guide RG 274—Product Design and Distribution Obligations. This guide is intended to help consumers obtain appropriate financial products by requiring issuers and distributors to take a consumer-centric approach to product design and distribution. AAMC Training has made adjustments and omissions to relevant areas of the guide to provide more clarity and context for Finance and Mortgage Brokers and their obligations.

The obligations require issuers and distributors to develop and maintain effective product governance arrangements across the life cycle of financial products to ensure that consumers receive products that are likely to be consistent with their objectives, financial situation, and needs.

The design and distribution obligations were originally scheduled to commence on 5 April 2021. Due to the COVID-19 pandemic, ASIC provided a temporary exemption from the obligations for six months to 5 October 2021.

Estimated Time To Complete

Learning Outcomes

By the end of this course, you will be able to