Design and Distribution Obligations (DDO) resource centre

The Design and Distribution Obligations (DDO) regime under the Corporations Act commenced on 5 October 2021. DDO applies to most new financial products. Obligations are on-going for open products. ASIC is expected to undertake market surveillance in late 2022. Let us know how we can help.

The impact of the DDO regime

The DDO regime requires a new way of manufacturing and distributing financial products. DDO affects not just product issuers, but product distributors.

To meet the Design and Distribution Obligations:

  • product issuers must design financial products that are likely to be consistent with the likely objectives, financial situation and needs of the consumers for whom they are intended (the target market); and
  • product distributors must take ‘reasonable steps’ to distribute financial products to the target market.

Although the detailed Design and Distribution Obligations are complex (and how they work in practice will depend on the exact product), product issuers will need to design and implement product governance arrangements applicable to DDO that covers the following three phases:

diagram explaining design phase, monitoring and review phase and distribution phase.

What you have to do: our key tips

Product issuers must consider the following steps unless you have done so already.

Identify your retail products. For example, this may not be immediately evident where one fund has multiple offering documents or multiple investment options and some are offered to wholesale clients only.

Identify your distributors. You need to identify who distributes your products, as they will have distribution obligations. This may include financial advisers, platforms, authorised representatives with dealing authorisations or asset managers offering PDSs on their website.

Identify whether you’re a distributor as well. The ‘distribution obligations’ apply to product issuers who distribute their products directly, for example, via their own website.

Develop product governance arrangements. This framework will need to set out a methodology for product managers to design products, identify target markets (and negative target markets), conduct consumer testing, establish distribution criteria and restrictions, identify review triggers and information collection methods, and develop a draft TMD. This framework should also set out the board approval processes, board delegations, record-keeping processes, and procedures for notifying ASIC of significant dealings. This framework may require amendments to a number of existing policies and processes.

Develop a TMD for each product. Along with a PDS, each retail product must have its own TMD. The manner in which it will be publicly available must also be determined.

Developing a ‘reasonable steps’ plan. You need to determine the ways that you will ensure that your products are distributed only to the target market.

Amend distribution agreements. Existing distribution agreements may need to be amended to address, and new distribution agreements will need to address, the obligations of distributors regarding their distribution obligations, as well as obligations regarding record-keeping. Practically, you will need to deal with matters such as sharing consumer and product information, dealing with privacy concerns, and implementing new monitoring and termination provisions.

Review IT arrangements. Your IT systems will not only need to be able to collate, store, process and report on the new data, but they may need to be modified or augmented so that they are in sync with systems used by your distributors.

How we can help you

As you can see, there is a lot to do to comply with the new DDO regime. We can help you comply by:

  • advising you on your legal obligations, whether as a product designer or product distributor or both;
  • drafting or reviewing your policies and governance framework;
  • designing DDO checklists and implementation plans;
  • drafting or reviewing your distribution agreements;
  • providing legal sign-off on documentation, such as your TMDs, as well as PDSs and marketing material that may need to be updated as you prepare your TMDs; and
  • conducting legal, regulatory and compliance training.

We have worked closely with industry groups in the lead up to DDO regime's commencement.

Featured thinking

Key contacts

Vince is an experienced funds management and financial services practitioner, working with Australian and global fund managers.

Harry New


Co-Head of Financial Services & Insurance

Harry leads our financial services team and focuses extensively on financial services law and corporate advisory.

John has broad experience in financial services, funds management, blockchain, corporate and corporate law.

Christopher Brown

Partner & Head of UK Practice

Chris advises on public company takeovers and private M&A deals; business and share sales, equity investments and joint ventures.

Matthew Curll


Co-Head of Financial Services & Insurance

Matthew is a leading insurance lawyer and co-lead of the firm's National Financial Services + Insurance Industry Group.

Anne advises on regulatory reform, superannuation fund product offerings, licensing, disclosure, fee arrangements and more.

Adrian’s financial services law practice covers superannuation, managed funds, insurance, and financial advice.

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