Design and Distribution Obligations (DDO): Aligning Products with Consumer Outcomes
Understanding DDO
The Design and Distribution Obligations (DDO) regime, introduced by ASIC, requires financial services firms to design products that meet the needs of target markets and ensure those products are distributed appropriately. It applies across issuers and distributors of financial products, with a focus on improving consumer outcomes and reducing the risk of mis-selling.
DDO requires firms to create Target Market Determinations (TMDs), monitor distribution practices, collect feedback, and take corrective action when products are being sold outside their intended market.
Why DDO Matters
DDO has reshaped the product governance landscape in Australia. It forces financial institutions to demonstrate that they understand their customers, design products accordingly, and maintain oversight of how those products reach the market.
Key implications include:
Consumer-centric product design to reduce harm and mis-selling.
Greater accountability for boards and senior executives in product governance.
Regulatory scrutiny by ASIC, including stop orders and enforcement actions for non-compliance.
Ongoing monitoring obligations that require investment in data, reporting, and review processes.
For firms, strong DDO frameworks are not just about compliance, they provide an opportunity to align products more closely with customer needs and build long-term trust.
Key Challenges Facing Firms
Designing defensible Target Market Determinations (TMDs).
Monitoring distribution channels and identifying out-of-market sales.
Collecting and analysing feedback data for ongoing reviews.
Embedding governance processes that link DDO with breach reporting and remediation.
Responding to ASIC stop orders and enforcement trends.
How OCG Can Help
At Oceanic Consulting Group (OCG), we partner with financial institutions to design, implement, and assure DDO frameworks that withstand regulatory scrutiny.
Our services include:
Drafting and reviewing Target Market Determinations (TMDs).
Designing product governance frameworks aligned with ASIC expectations.
Implementing monitoring and data solutions for distribution oversight.
Conducting independent reviews of product governance processes.
Supporting remediation programs where DDO gaps have been identified.
FAQs
What are the Design and Distribution Obligations (DDO)?
DDO is a regulatory framework overseen by ASIC that requires issuers and distributors to design financial products for identified target markets and monitor distribution to ensure alignment.
Who does DDO apply to?
DDO applies to issuers and distributors of financial products across wealth management, superannuation, insurance, and banking.
What is a Target Market Determination (TMD)?
A TMD is a document that defines the class of consumers a financial product is suitable for, sets distribution conditions, and outlines monitoring requirements.
How can OCG support firms with DDO?
OCG provides advisory services in drafting TMDs, building monitoring frameworks, implementing product governance, and conducting independent assurance reviews.
Strengthen Your DDO Framework
Partner with OCG’s Product Governance Specialists
Ensure your product governance frameworks meet ASIC’s expectations and deliver better consumer outcomes. Contact OCG today to strengthen your DDO program.
