Target market determinations

Issuers and distributors of financial products, such as financial advisers and super funds, must comply with DDO legislative requirements from 5 October 2021.

We have implemented these to ensure financial products are designed for, and distributed to, the target consumers.

A financial adviser can be a distributor who needs to follow the DDO requirements if they issue or sell a product. This includes Australian Financial Services (AFS) licensees or authorised representatives, credit licensees and representatives, and distributors of deposit products, insurance, and consumer credit insurance.

Distribution covers 'retail product distribution conduct', which includes:

1. Dealing in the financial product
2. Giving a disclosure document in relation to offering a financial product
3. Providing a PDS
4. Providing financial product advice.

An example provided by ASIC in RG274 (pdf) is someone who arranges for a client to apply for a home loan.

1. Consider the Target Market Determination

• Become familiar with the content of the TMDs for QSuper products.
• Consider the TMD parameters when recommending QSuper products.

2. Assess the suitability of the product for your client

• Clarify the target market for a QSuper product (refer to our TMDs) and assess the suitability of a QSuper product for your client.
• Where you're providing general advice only or execution only services, it's important you take reasonable steps that will likely result in the general advice or distribution being consistent with the product’s TMD. Reasonable steps mean taking into account all relevant factors such as:
• Risk - the likelihood of distribution being inconsistent with the TMD
• Harm - the nature and degree of harm that a retail client might experience if they purchase a product when they are not in that product's target market
• Mitigation - ways to eliminate or minimise the likelihood of harm, and making sure those methods are available and suitable.

3. Report significant dealings and complaints to QSuper

Significant dealings:

• A significant dealing includes:
• A high proportion of consumers not in the target market acquired the product
• Identifying potential/actual harm to consumers outside of the target market acquiring the product
• Distributing the product inconsistently with the TMD, where distribution is significant in nature and extent
• A high proportion of transfers into the product are from consumers outside the target market
• A significant number of consumers outside the target market acquire the product over an extended time period.
• If you become aware of a significant dealing, report it to QSuper by emailing your report to DDOReporting@qsuper.com within 10 business days of the event occurring.
• Your report needs to include the following data:
• ABN
• AFSL number
• Contact details
• Report date
• Report period start and end date
• Product
• Date of significant dealing
• Client
• Description
• Why it is significant
• How it was identified
• Financial impact to member (if any)
• Steps taken to fix the significant dealing.

Complaints:

• Report any complaints about a product or its distribution to QSuper in accordance with the new RG271 guidelines.
• You need to report the number of complaints once a quarter - as soon as practicable, but within 10 business days of the end of a calendar quarter.
• Email the details of any complaints you've reported to us to DDOReporting@qsuper.com within 10 days of the end of the reporting period.
• Your report needs to include the following data:
• ABN
• AFSL number
• Contact details
• Report date
• Report period start and end date
• Product
• Complaint ID
• Date complaint received
• Complaint issue
• Complaint content
• Complaint status
• Compensation
• How it was identified
• AFCA status
• AFCA reference.

We will review the TMD for each product on a regular basis and check the product remains suitable for the defined target market. The TMD lists trigger events that would mean we need to review a TMD.

When a product's TMD needs updating, we will update it as appropriate.