Target Market Determinations are necessary but not sufficient for DDO compliance

So, it’s go time. There’s now just two months until the Design & Distribution Obligations (DDO) are imposed from October 5, and Australian Financial and Insurance Services companies have spent time and money prepping.

Affected products have been inventoried. Markets defined and distribution channels mapped. The Target Market Determination (TMDs) we are seeing loaded into ProductCloud (over 300) are meaty, exact and complex.

That’s all great. Except the truth is that what you’ve done already is necessary but not sufficient.

ASIC won’t hesitate to clamp down on banks not doing the right thing, it warned on April 22 at an industry roundtable. Calling DDO “the jewel in our recalibrated legislative crown”, deputy chair Karen Chester quoted Jane Austen: “I do not want syllables where actions have spoken so plainly.”

In other words, the actions product issuers take to address the new obligations will speak louder than words included in TMDs.

The 2020 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry highlighted that weaknesses in processes for, and controls on, product distribution to consumers led to significant consumer losses. For a successful DDO implementation, the playbook reads:

  • Control environment—developing an attitude towards DDO compliance that aligns issuers and distributors. The TMD in itself won’t give you this but does provide the framework.

  • Risk Assessment—identifying the events and triggers that suggest the suitable products are not ending up in the right hands.

  • Control Activities—readily shared and accessible policies and procedures that help ensure management’s directives are followed.

  • Information and communication—fully integrated product information and performance communication loops between issuers, marketers, distributors and invested support parties.

  • Monitoring/Reviewing—constant review of product and distribution performance. If things go wrong, who needs to be notified, how, and what actions need to be taken quickly. Mere reporting and manual communication flows won’t cut it.

While TMDs define what needs to be done, how their intent is operationalised will define DDO success.

Manual or point solutions that don’t integrate core banking, product information management and DDO governance also introduce the risk of an unacceptable level of technical debt and an implied cost of additional rework.

The DDO regimen will evolve, and banks will need to remain agile and adapt. As the Consumer Data Right and DDO regimes overlap in 2022, tools like ProductCloud that integrate product and TMDs will enable product feature comparison of all banking products in the market and access all published TMDs.

The good news? While the clock is ticking, it’s not too late to have a compliant but scalable solution in place by the deadline.

ProductCloud are experts in central product information management who provide out of the box compliance for the Design & Distribution Obligations. Find out more at

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