Design and Distribution Obligations

You can now find our Target Market Determinations at onepathinsurance.com.au/tmd.

One of the key instruments in reinforcing suitability of products for specific classes of customers is the Target Market Determination (TMD).

Under DDO, product issuers will be required to make publicly available a TMD for each product.  Depending on the type of product, a TMD may be issued for an overall product (more likely for direct-sold life insurance) or for each individual cover type, for example TPD cover or Income protection cover.

The TMD will describe the typical objectives, financial situation and needs of consumers in the target market, describe the product features, and explain why those features are likely to meet consumers’ needs. The TMD will generally also articulate time horizon, risk level, and other relevant suitability criteria. In some cases, a TMD may identify the ‘negative target market’ - those consumers for whom the product is not deemed suitable, although this is not mandatory.

While ASIC does not specify the exact format of a TMD, many insurers, including OnePath, will be reasonably aligned with the standardised templates developed by the Financial Services Council (FSC). Such standardisation should help advisers become more familiar with TMDs more quickly and will help streamline the product comparison process.

OnePath TMDs will be publicly available on the OnePath website and on other online locations. These links will be available in the product PDSs.

The TMD will also specify any events that suggest the TMD is no longer appropriate - known as ‘review triggers’ - along with the normal schedule of TMD reviews.

Importantly for distributors, the TMD will also specify when the distributor should provide information about the numbers of complaints to the issuer; and what information distributors must report to the issuer and how frequently, in order to enable the issuer to identify whether the TMD may no longer be appropriate.

While every product provider is likely to have their own requirements, we are committed to standardising processes wherever possible. To this end we are in consultation with a range of industry stakeholders about informational requirements and will provide more clarity once available.

Distributors are required to provide information regarding complaints received by the distributor in relation to the product during the reporting period specified in the TMD.  This information needs to be provided within 10 business days after the end of the relevant reporting period.

The relevant reporting period is specified in the TMD.  The general reporting periods are outlined below:

Zurich Financial Services Australia (Zurich) has signed onto Iress’ blockchain-based industry solution for managing its obligations under the Design and Distribution Obligations (DDO) legislation.  Reports may be submitted using the chatbot here. 

Distributors must notify a product issuer of a significant dealing that is not consistent with the product’s TMD within 10 business days after becoming aware. Distributors should consult with their compliance team whether a dealing is significant. 

Zurich Financial Services Australia (Zurich) has signed onto Iress’ blockchain-based industry solution for managing its obligations under the Design and Distribution Obligations (DDO) legislation.  Reports may be submitted using the chatbot here.