Annual Compliance Costs for the Industry as a Whole to Amount to $94.7 million
Industry concerns about implementation costs could be dealt with by ensuring the obligation builds on good practice, is principles based and is applied on a scaled basis, allowing scope for firms to adapt their existing practices. Thus, the new obligation imposes minimal costs on firms with existing good practices. Some incremental costs for industry may include client categorisation, record keeping, updating documentation and staff training, as well as monitoring changes in the external environment.
The Government assumes that the new DDO Law option delivers benefits to industry, including strengthening internal risk management for product design, which may mitigate future problems, as well as signalling a higher level of customer focus. This approach also avoids new, more complex and interventionist regulation in the future, promoting efficiency in the financial system overall.
Assuming that the new DDO Law option delivers benefits to industry, including strengthening internal risk management for product design, which may mitigate future problems, as well as signalling a higher level of customer focus. This approach also avoids new, more complex and interventionist regulation in the future, promoting efficiency in the financial system overall.
A regulatory costing has been prepared, consistent with the Government’s Regulatory Burden Measurement Framework. For product issuers and distributors, implementation and ongoing costs are associated with:
• developing policies and procedures to ensure that they are complying with the new requirements;
• changing product review and distribution standards; and
• communicating with other distributors and issuers as relevant.
The costs also include updating IT systems to ensure that existing systems are compliant with requirements and that they will be able to monitor products and customers on an ongoing basis.
It is estimated that the increase in annual compliance costs for the industry as a whole will amount to $94.7 million annual compliance costs for the industry as a whole will amount to $94.7 million
(Source: DDO Bill 2019 – EXPLANATORY MEMORANDUM)