Design and distribution obligations: Significant dealing notification requirements
From 5 October 2021, new product design and distribution obligations come into force. These reforms require firms to design financial products to meet the needs of consumers and to distribute their products in a more targeted manner.
As part of these obligations, issuers must notify ASIC of a significant dealing (except excluded dealings) in a financial product that is not consistent with the product’s target market determination (TMD): see s994G. Distributors must notify issuers when they identify a significant dealing that is not consistent with the TMD: see s994F(6).
Key points and some frequently asked questions are outlined below. For more detailed information please refer to RG 274.
- Where a significant dealing outside of the target market occurs, issuers are required to notify ASIC with relevant information. This page explains how an issuer can notify ASIC of a significant dealing.
- The information required when notifying ASIC of a significant dealing is set out in Table 5 of RG 274.
- For all other types of notifications, including those related to other breaches of the design and distribution obligations, AFS and Australian credit licensees are required to submit reportable situations to us via the approved form available in the ASIC Regulatory Portal.
Frequently asked questions
What is a 'significant' dealing?
A significant dealing is a dealing to clients outside of the TMD for a product. Whether a dealing is significant will be a matter for the issuer and/or distributor to determine in the particular circumstances. The reason a client is outside the target market may impact why distribution to them represents a significant dealing, for example.
The significant dealing notifications requirement does not replace breach reporting obligations. A significant dealing does not necessarily equate to a breach of the law. See Breach reporting by AFS licensees and Changes to how AFS licensees and Australian credit licensees report breaches.
RG 274 outlines factors that may be considered in determining whether a significant dealing exists, including:
- proportion of consumers not in the target market
- actual or potential harm to consumers, including amount of loss
- nature and extent of inconsistency of distribution to the target market determination.
If you are not sure whether a dealing is significant, we encourage you to report the dealing to ASIC (if you are an issuer) or the issuer (if you are a distributor).
How do I notify ASIC of a significant dealing?
Issuers must notify ASIC in writing as soon as practicable, and within 10 business days after becoming aware of a significant dealing. Initially we will accept notifications by email to email@example.com, before transitioning this functionality to the ASIC Regulatory Portal.
What information am I required to provide ASIC?
The notification of a significant dealing could include:
- date(s) of the significant dealing
- description of the significant dealing
- why the dealing is significant
- how the significant dealing was identified
- what steps, if any, have been, or will be, taken in relation to the significant dealing
The information required when notifying ASIC of a significant dealing is set out in Table 5 of RG 274, which provides further detail relating to the content of the notification to ASIC. If an issuer does not have information about specific matters at the date of notification, it should include the information it does have and supplement it by providing further information as it becomes available.
When will I be able to submit notifications using the ASIC Regulatory Portal?
ASIC is currently making changes to ensure notifications will soon be able to be submitted via the Regulatory Portal. ASIC will update this page once this work is completed and notifications are able to be submitted via the Regulatory Portal.
- Regulatory Guide 274 Product design and distribution obligations (RG 274).