Novus Capital Limited is an investment and financial services company specialising in Investment Banking, Corporate Advisory and Share Trading services for Australian corporate and private clients, and overseas corporate clients.


Design and Distribution Obligations (DDO) Overview

The design and distribution obligations (DDO) regime were introduced in October 2021 and brought a new approach to regulation, by moving away from relying on disclosure as the main form of consumer protection and introducing new measures to ensure that products are designed and distributed with consumers in mind.

The DDO reforms require Product Issuers to design financial products to meet the needs of consumers (i.e., their Target Market Determination- TMD) while Distributors are required distribute the products in a more targeted manner and ensure that clients and consumers are only being sent offers and or products that are appropriate.  

ASIC’S RG 274 – Product Design and Distribution Obligations sets out the guidance notes issued by ASIC on how to comply with DDO obligations. 

Generally speaking, issuers and distributers must have in place specific governance arrangement to ensure they are each meeting their specific regulated obligations.  While there are no set requirements, the regulatory guide confirms that the process in place must meet the overall object of the DDO regime and ensure compliance to the obligations.

What is a 'significant' dealing?

A significant dealing is a dealing to clients outside of the TMD for a product. Whether a dealing is significant will be a matter for the issuer and/or distributor to determine in the circumstances.

RG 275 outlines factors that may be considered in determining whether a significant dealing exists, including:

  • proportion of consumers not in the target market
  • actual or potential harm to consumers, including amount of loss
  • nature and extent of inconsistency of distribution to the target market determination.

Issuers must notify ASIC in writing as soon as practicable, and in any case within 10 business day after becoming aware of a significant dealing.