Design and Distribution Obligations (DDO)
On 5 October 2021, the Design and Distribution Obligations (DDO) came into effect for all issuers and distributors of financial products (fund managers and advisers) that are covered by DDO.
The DDO regulations require issuers and distributors of financial products to adopt a consumer focussed approach to the design and distribution of their products to help consumers assess the appropriateness of the products in light of their personal circumstances and needs. This is called a Target Market Determination (TMD).
What is a Target Market Determination (TMD)?
As a product issuer DomaCom has created a TMD for each of our products and investment options under our Design and Distribution Obligations that;
- Describes the target market and outlines the likely financial circumstances, financial objectives and needs of potential investors for who the product/s may be suitable.
- Establishes any conditions or restrictions on the recommendation or sale of the product and/or investment options, such as Advisers Accreditation, appropriate ASIC licensing and AFSL approval.
- Establishes reporting regimes for advisers (distributors) in particular complaints and any transactions inconsistent with the Target Market Determination.
Target Market Determinations
Key Obligations for a product issuer (manufacturer)
Our key responsibilities as a product issuer are:
- to create and maintain the TMD for all our products that are covered by DDO
- to take reasonable steps to ensure our products are distributed in line with those TMDs.
Key Obligations for distributors (financial adviser)
The key obligations for product distributors are:
- to ensure there’s a TMD in place for all of the products that they distribute that are covered by DDO
- to understand and follow the distribution conditions and reporting requirements set by the product issuer in the relevant TMD, eg they must collect and keep the information specified in the TMD, including complaint numbers (even where no complaints are received)
- to take reasonable steps to ensure the product is distributed in line with the TMD
- to keep records of distribution information
- to report information to the issuer as required by the TMD.
Frequently Asked Questions
Distribution conditions are conditions or restrictions on the sale of a product, put in place by the issuer, to ensure that the product is sold to customers in line with the TMD. Product distributors will need to adhere to the distribution conditions established in the TMD.
You’re expected to understand the requirements we establish in the TMDs for our products. This means you need to:
- understand the target market defined in a TMD and take reasonable steps to ensure the product is distributed in accordance with the TMD
- understand and adhere to any distribution conditions established in the TMD
- provide information as specified in the TMD, at the required frequency and in the required form
- keep accurate records of the reasonable steps taken and any information provided to us
- report to us where you believe a significant dealing in the product which is inconsistent with the product’s TMD has occurred.