I have a suspicion that no-one is ever going to identify a significant dealing. Why? Because everyone seems to expect someone else to find them. Is this OK? I don’t think so.
So the question is, how have we got here and what, if anything, should we do about it?
Pin your ears back my friends, I feel a rant coming on!!
First things first, just what is ‘significant’?
As you probably know, this is one of the trickiest elements, because ‘significant’ isn’t defined anywhere!! The reg guide says:
“The term ‘significant dealing’ is not defined in the Corporations Act. This is consistent with the term ‘significant’ being undefined elsewhere in the Act. Whether or not a dealing is significant is a matter to be determined in the circumstances of each case. Issuers, who have an aggregate view of the distribution of their product, will take a more systemic approach to determining whether a dealing is significant.”
Er, thanks team. About the only thing that is certain, is that if you’ve got lots of customers who are outside your target market, then you’ve probably got a sig dealing on your hands. Well, it’s likely… You should totally consider it? K?
So with that sorted*, let’s move on to the next stage of exactly who is going to find the veritable needle in the haystack.
*yes, not sorted. Just do your best darling. We have 15 weeks to go and you need to make some decisions!
See no evil, hear no evil.
Right, let’s go down the list:
Product issuers (especially fund managers) – When 95% of your distribution is via other parties, and you don’t have any info about those investors, you can’t do your own analytics, it’s simply impossible.
Platforms – Most platforms at least do AML so they should have some good info yes? Well, from what I’m hearing, many platforms won’t be doing any analysis of the clients coming in, on the basis that they are leaving it the…
Advisers – who we are all going to rely on. Except that many advisers still think that DDO doesn’t apply to them. And frankly, if you ask someone if the client is in the target market, they are going to say yes!
So is ANYONE going to find a sig dealing?
Well, without some serious data science, the answer is no. No-one is going to look, and no-one is going to find any sig dealings. Which frankly is a bit disappointing.
Yes, this is definitely me getting on my high horse, but if the whole reason for DDO is to reduce the number of people being harmed by inappropriate financial products, then what’s the point of all the work on TMDs and complaints and all the rest if there could be sig dealings lurking for years before anyone figures it out.
You know what I’m going to say next 🙂
In my view, big data is the answer. If you want to be confident that there’s nothing nasty hiding in your customer base, then a data trust like Wattletree is the only way to go. That way you can demonstrate reasonable steps, and at the same time, have the Wattletree machine on the hunt for anything that looks like it might be a sig dealing, while you get on with delivering quality products for your customers. ***Rant ends here***
If there’s a burning DDO question that no-one seems to have a good answer to, or you just need to understand how Wattletree works in more detail, please get in touch. I invite you to shoot through your Q’s using the below form or alternatively you can call me on 0417 970 818. There’s no such thing as a silly question*
*OK, we all know that’s rubbish but you know what I mean!