Who must comply with Design and Distribution Obligations (DDO) — RG 274?

Issuers + distributors of retail financial products bound by DDO from 5 October 2021.

Section 994B Corporations Act. Issuers must make TMD identifying class of consumers + review triggers. Distributors must distribute consistently with TMD + report significant dealings outside TMD to issuer + ASIC. RG 274 guides.

Applies when the business has issues products or an ACL or APRA regulation. Where the business has an AFSL or credit activity, check whether you issue or distribute retail financial or credit products.

How the regulator frames it: AFSL holders issuing or distributing retail financial products + credit products.

What triggers it: Issuing or distributing in-scope retail product.

Jurisdiction: Commonwealth law, so the test is the same in every state and territory.

Outcome across the 35 industries Rules Mate maps (3 of 35: yes; 1 of 35: only if a further fact applies; 31 of 35: no).

Structure does not change the answer in the 4 industries it can reach: for every structure the answer is "depends on size or structure".

Size does not change the answer in the 4 industries it can reach: at every size band the answer is "depends on size or structure".

Each line is one run of the Rules Mate applicability engine for a single business profile, with the reason the engine gives:

• Pty Ltd company in banks & adis with 6–19 employees, turnover $1M–$3M: applies. ADI — APRA-regulated.
• Pty Ltd company in real estate agents with 6–19 employees, turnover $1M–$3M: does not apply. Requires issues products or an ACL or APRA regulation.
• Pty Ltd company in credit licensees & mortgage brokers with 6–19 employees, turnover $1M–$3M: check whether it applies. applies only if you issue or distribute retail financial or credit products.

Starting from a small or large professional services company that does not otherwise meet the test, each of these single facts changes the engine's answer:

• The business holds an Australian financial services licence (AFSL): it becomes worth checking, because it applies only if you issue or distribute retail financial or credit products.
• The business holds an Australian credit licence (ACL): it then applies (ACL holder).
• The business provides credit to customers: it becomes worth checking, because it applies only if you issue or distribute retail financial or credit products.
• The business is regulated by APRA: it then applies (APRA-regulated).

The engine shows this obligation as "check whether this applies" when a business has an AFSL or credit activity. It then applies only if you issue or distribute retail financial or credit products. That fact is not something Rules Mate can infer from industry, structure or size.

When due

TMD before first distribution; review on triggers; significant dealings within 10 business days.

Frequency

Ongoing

Evidence to keep

TMD; distribution monitoring; significant dealings notifications; periodic review.

In force from

5 October 2021

Status

Current

Priority

Critical

No maximum penalty is recorded for this obligation in the Rules Mate corpus; check the regulator source below.

Rules Mate has not yet classified the audit or assurance level for this obligation. Any audit, review or certification requirement is set by the regulator source listed below.

If this obligation applies to you, so does this one: the engine uses the same rule for each.

• Comply with Design and Distribution Obligations (DDO)

• Ban on conflicted remuneration (FOFA): AFSL holders and representatives must not accept conflicted remuneration in connection with retail financial product advice.
• Best interests duty for financial advisers (s 961B-G): Personal advisers must act in client's best interests + meet related obligations.
• Comply with AFSL general obligations (s 912A): AFSL holders must do all things necessary to ensure financial services are provided efficiently, honestly and fairly.
• Hold AFSL with derivative authorisations (margin lending + CFD + binary): Issuers of OTC derivatives to retail clients face product intervention orders + tightened conditions.
• Lodge a prospectus for offers requiring disclosure: Offers of securities to retail investors require a prospectus or OIS lodged with ASIC.

Across the 1,890 business profiles Rules Mate evaluates, these obligations apply to most of the businesses this one applies to, and are far more common among them than among businesses generally:

• Comply with APRA CPS 220 (Risk Management): applies to 100% of the same businesses (11.7× the overall rate)
• Comply with APRA CPS 230 (Operational Risk Management): applies to 100% of the same businesses (11.7× the overall rate)
• Comply with APRA CPS 234 (Information Security): applies to 100% of the same businesses (11.7× the overall rate)
• Comply with Financial Accountability Regime (FAR) accountability obligations: applies to 100% of the same businesses (11.7× the overall rate)
• FAR deferred remuneration arrangements (40% deferral 4 years): applies to 100% of the same businesses (11.7× the overall rate)

Rules Mate tracks 17 published obligations tagged "financial services", 12 of them rated critical. For a professional services Pty Ltd company with 6–19 employees operating in every state, 0 of those apply outright. This obligation is rated critical priority, and is an ongoing duty.

Regulated by Australian Securities and Investments Commission.

ASIC: Corporate regulator administering the Corporations Act, financial services and credit licensing (AFSL/ACL), markets supervision, insolvency, and registries (ASIC and ABRS).

• Australian Securities and Investments Commission

Corporations Act: The foundational federal Act for Australian corporate law.

• Corporations Act 2001

Free tools that help with this obligation:

• CPS 230 readiness scorer
• CPS 234 readiness scorer
• Reportable situations timer