
ASIC releases RG 274 - "Product Design and Distribution Obligations"
The long-awaited RG seeks to ensure that consumers obtain appropriate financial products by imposing a series of design and distribution obligations on financial product issuers and distributors.
In December last year, ASIC published the long-awaited Regulatory Guide "RG 274 - Product design and distribution obligations". The RG's stated objectives are:
to help consumers obtain appropriate financial products;
to reduce poor product development or distribution practices which result in adverse consumer outcomes.
to prevent consumer detriment.
The RG gives effect to these aims by imposing a series of design and distribution obligations (DDO) on issuers and distributors of financial products.
These DDO obligations include the following:
Financial product issuers
Financial product issuers must:
prepare a Target Market Determination ("TMD");
make the TMD publicly available;
take reasonable steps to ensure that distribution of the product is consistent with its TMD;
review the TMD to ensure it remains appropriate;
notify ASIC of "significant dealings";
keep records.
Financial product issuers
Financial product distributors must:
not distribute unless a TMD has been made;
take reasonable steps to ensure that distribution is consistent with the most recent TMD;
notify the issuers of "significant dealings";
keep records.
The Regulatory Guide (and related legislative instruments) can be accessed here.
