From 5 October 2021, product issuers and distributors (including financial advisers) of financial products need to comply with the new Design and Distribution Obligations (DDO).
Frequently Asked Questions (FAQs)
What is the purpose of DDO?
DDO is intended to help consumers obtain appropriate financial products by requiring product issuers and advisers to have a consumer-centric approach to designing and distributing products by:
- Product issuers designing financial products that are consistent with the likely objectives, financial situation and needs of the customers for whom they are intended
- Product issuers and distributors taking ‘reasonable steps’ that are likely to result in financial products reaching customers in the target market described in the Target Market Determination (TMD)
- Product issuers monitoring customer outcomes and reviewing their financial products to ensure that customers are receiving financial products that are likely to be consistent with their likely objectives, financial situation, and needs.
What is a Target Market Determination (TMD)?
The TMD is a document issued by product issuers which:
- describes the class, or type, of customers who the product is likely to be appropriate for
- specifies conditions and restrictions on how products can be distributed to customers
- specifies events or circumstances that will require the product issuer to review the TMD for their products
- outlines the information that third-party distributors must provide to the product issuer (for products that require a TMD).
Where are the TMDs available?
The TMDs can be found at:
Where are the PDS available?
The PDS can be found at:
DDO Reporting requirements
Reporting will be required by advisers and licensees as distributors and should be sent to DDO@cromwell.com.au.
Adviser and issuer responsibilities
As a financial adviser your main obligations are:
- Consider the Target Market Determination (TMD) when giving personal advise, and take reasonable steps to ensure that the distribution of the product is consistent with the TMD
- Not engage in retail product distribution of a product without a TMD
- Notify Cromwell of a significant dealing in a product that is not consistent with the product’s TMD. This does not prevent a financial adviser from recommending the product if it is appropriate for a client
- Provide Cromwell with details of any complaints about our financial products and other distribution information stated in the TMD relating to the product
- Maintain your records and information relating to the DDO regime – eg number of complaints and other information re TMD for up to seven years
Cromwell recognises that our products are distributed via platforms, and as such the platform providers need to consider:
- Are the TMDs available through their platform as well as our website
- To comply with your ‘reasonable steps’ obligation, you may need to create restrictions on access to certain investment options within the platform
- Ensure that the platform considers the target market requirements and TMD as part of its function.