Design and Distribution Obligations
What are the Design and Distribution Obligations (DDO)?
ASIC Regulatory Guide 274 (RG 274) requires Issuers and Distributors of financial products to take steps to ensure that retail clients are offered products that are likely to be consistent with their likely objectives, financial situation and needs. The DDO regime is designed to provide a framework for all retail products (funds) to be more focused on client outcomes throughout the design and distribution process.
What is a Target Market Determination (TMD)?
A TMD is a document which describes who a fund is appropriate for (target market), and any conditions around how a fund can be distributed to retail customers.
The Responsible Entity will also ensure reasonable steps are taken to ensure on an ongoing basis that product distribution is consistent with the target market determination of funds.
For more information about RG 274 see here: RG 274 Product design and distribution obligations | ASIC – Australian Securities and Investments Commission
Reporting Requirements
The TMDs need to be made available to financial planners and platforms and they, in fulfilling their best interests duty to their clients, only recommend products to clients who are deemed suitable for a product based on the TMD.
We would like financial planners and platforms to provide us with a separate, annual (or more frequent), assurance that:
-
they have access to our current TMDs
-
they have read and understood the TMDs
-
in providing financial product advice to clients they have considered their suitability to invest in the products given the TMDs or,
-
have otherwise made the TMDs available to their clients.
These reports should be in the format of the FSC Complaints Reporting Template and DDO Dealings Reporting Template (https://www.fsc.org.au/resources/target-market-determination-templates). Completed reports are to be sent by email: reporting@copiapartners.com.au