- The purpose of DDO – why the new obligations have become necessary and what they seek to achieve.
- The Target Market Determination (TMD) – what is a TMD and how have we identified the appropriate customers for our financial products?
- Our obligations – outlines the obligations for us as a product issuer and you as an adviser. We will also provide some answers to the common questions we have received about the obligations.
The purpose of DDODDO 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. Three ways the obligations help consumers:
- Product issuers, such as Challenger, need to design 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 need to take ‘reasonable steps’ that are likely to result in financial products reaching customers in the target market described in the TMD;
- Product issuers need to monitor customer outcomes and review 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.
To meet these obligations, product issuers such as Challenger need to make a Target Market Determination (TMD) for each of their financial retail products that are currently available for investment.
The 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; and
- outlines the information that third-party distributors must provide to the product issuer (for products that require a TMD).
The TMDs can be found here, along with the relevant Product Disclosure Statement for each of Challenger’s retail products that are available to new investors.
There are different sets of obligations for product issuers and product distributors. However, they are all intended to ensure both take a consumer-centric approach - placing consumer outcomes front and centre of the product design, product distribution, and the monitoring and review stages of the product life cycle.