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Design and Distribution Obligations (DDO) in AdviserLogic
The Design and Distribution Obligations (DDO) legislation came into effect in Australia on 5 October 2021 to ensure financial products are designed and distributed with a consumer-centric approach.
As outlined in ASIC Regulatory Guide 274 (RG 274), the objective of DDO is to help consumers access financial products that are appropriate for their needs by requiring issuers and distributors to take responsibility for product design and distribution.
DDO and Personal Advice Exemptions
ASIC has provided specific guidance regarding personal advice, stating that advice licensees and financial advisers are exempt from ensuring that products are distributed in line with Target Market Determinations (TMDs). This means that while advisers must act in their clients' best interests, they are not directly responsible for verifying whether a product aligns with its stated TMD.
How AdviserLogic Supports DDO Compliance
AdviserLogic assists advisers and licensees in meeting DDO requirements by:
Providing access to Target Market Determinations (TMDs) within the platform, enabling users to review and assess product suitability.
Facilitating the logging of client incidents, including instances where a client purchases a product outside the intended target market or submits a product-related complaint.
By integrating these features, AdviserLogic helps advisers navigate regulatory requirements efficiently while maintaining a client-focused approach to financial product recommendations.
Morningstar’s Target Market Determination Collection
Morningstar has proactively collaborated with product issuers and industry groups since the introduction of Design and Distribution Obligations (DDO). Our focus has been on developing a standardised format for product issuers to submit their Target Market Determinations (TMDs), ensuring consistency and accessibility across the industry.
AdviserLogic’s Approach to TMD Collection & Compliance
Different licensees may adopt varying approaches to collecting and analysing TMDs. To accommodate this, AdviserLogic supports the strictest interpretation of DDO requirements, ensuring compliance across diverse regulatory expectations.
While ASIC has clarified exemptions for personal advice, practices involved in execution-only transactions or general advice may still need to adhere to TMD compliance obligations. AdviserLogic is designed to assist advisers in these scenarios, helping them navigate regulatory requirements efficiently while maintaining best-practice compliance standards.
AdviserLogic Design and Distribution Obligations (DDO) Functionality
AdviserLogic supports compliance with Design and Distribution Obligations (DDO) by providing streamlined access to Target Market Determinations (TMDs) and improved tracking of client interactions.
Download TMD documents for investment options recommended through Scenario Cards in the Digital Advice module. |
Generate TMD & PDS documents through Reports > Templates, allowing users to include these documents when generating reports for existing and recommended investment options. |
File note categories available to capture:
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Download TMD documents directly from Client Assets and Superannuation pages |
Identify whether TMD documents are available for holdings within a portfolio without needing to download them. |
How AdviserLogic Supports Design and Distribution Obligations (DDO)
AdviserLogic provides comprehensive support for managing Design and Distribution Obligations (DDO) through seamless TMD access, document generation, and reporting tools.
Digital Advice
If you use the Digital Advice module, you can download and review TMDs when generating Digital Advice scenarios.
When a Digital Advice Scenario is completed, TMD documents will be available under the ‘Download’ drop-down menu for the relevant advice scenario.
✅Tip
You can also choose to ‘Download All’ files associated with the advice scenario into a ZIP file for easy access and record-keeping.
📌 Notification Handling
Successful Download: You will receive a "File has been downloaded successfully" notification, and the TMD documents will be stored in a TMD folder under the relevant advice scenario name.
Unavailable TMDs: If TMD documents are not available in the Morningstar database, a "No File available for download" notification will be displayed.
TMD & PDS Document Generation in Reports
You can generate TMD & PDS documents outside of the Digital Advice module when creating reports.
In Reports → Templates, simply tick a checkbox to download TMD & PDS documents for both existing and recommended investment options.
This ensures that TMDs are included in compliance documentation and reports for better transparency and auditability.
File Notes
For situations where your client is taking up a product that may be considered unsuitable based on TMD guidelines, you can document your rationale using the File Notes feature.
Documenting TMD Suitability Exceptions
When your client selects a product that would ordinarily be unsuitable, you should:
Create a File Note and select the File Note Category → DDO - Outside TMD Suitability
Enter the Product Name in the Title field
Provide Detailed Comments, including:
The amount invested
Explanation of why the product is appropriate for the client
Confirmation if the product was selected as an execution-only option
Documenting Client DDO Complaints
Create a File Note and select the File Note Category → DDO Complaints Suitability
Enter the Product Name in the Title field
Provide Detailed Comments, including:
The amount invested
Circumstances surrounding the complaint
DDO File Note Reporting
For compliance and reporting purposes, you can track DDO-related interactions at any time.
Navigate to Segments
Run a report for:
DDO File Notes – Complaints
DDO File Notes – DDO - Outside TMD
To do this Enter the DDO Reort name in the name field and from the Fields to display section select:
Entity Name
File Note Title
File note category
Save the report, then open the Define Filters option.
Define the filters related to the File Note Categories and File Notes Titles
To define aa file note Category select the following
File Note | Category | Equals | Value Complaints or DDO - Outside TMD |
Save the Filter.
To add a filter based on the file note Title select the Following
File Note | Title | Contains | Value Enter the provider name from the File note Title you are looking for |
Send product-specific reports to relevant product issuers based on report outcomes.
These enhancements will help you navigate evolving regulatory requirements while improving efficiency and compliance processes.