Design and Distribution Obligations

On 5 October 2021, the Design and Distribution Obligations (DDO) will come into effect for all issuers and distributors of financial products that are covered by DDO.

We’re currently working through our obligations as an issuer and distributor, as well as how we’re going to work with the distributors of our products to meet these new requirements.

As we work through these new requirements, we’ll update the information on this page so stay tuned for more detail on our proposed approach.

What are the Design and Distribution Obligations?

DDO requires issuers and distributors of financial products to have a consumer-centric approach to the design and distribution of their products, with the aim of helping consumers to obtain financial products that are appropriate for their objectives, financial situation and needs.

The obligations apply to a broad number of financial products including (but not limited to) home loans, credit cards, asset finance, wrap platforms, managed funds and bank accounts.

What is a Target Market Determination (TMD)?

As a product issuer it’s our responsibility to create a TMD for each of our products covered by DDO that:

  • Describes the Target Market: outlines the likely objectives, financial situation and needs of customers the product has been designed for.
  • Establishes Distribution Conditions: details the conditions or restrictions on the sale of the product.
  • Establishes Reporting Requirements: sets out the relevant information that must be provided to us by distributors at our required frequency. At a minimum, a distributor must regularly report the number of complaints it receives about the issuer’s product to the issuer, as well as report any significant dealings in the product that are inconsistent with the TMD.

Key obligations for a product issuer

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 a product distributor

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.