The DDO is here. An expensive lesson in compliance with ASIC’s recently introduced disclosure requirements for financial products for retail clients
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I am an experienced litigation and investigations lawyer based in Sydney, leading Bird & Bird's Australian disputes and investigations practice and co-leading our global Defence and Security practice.
Senior Associate
Australia
I am a senior associate in the Dispute Resolution team in Sydney. I provide succinct, solutions orientated advice to help our clients solve complex problems, mitigate future risks and develop strategies to simplify their decision-making process.
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In a landmark decision, the Australian Securities and Investments Commission (ASIC) successfully obtained the first pecuniary penalty orders ($8 million) for contraventions of the design and distribution obligations (DDO) under the Corporations Act 2001 (Cth) in its action against Firstmac Limited (Firstmac).
Introduction
This article looks at the implications of this decision, examining its impact on financial product distribution and compliance requirements for corporations operating in Australia’s financial services sector.
Background and Context
In a liability judgment handed down on 10 July 2024, the Court found that Firstmac Limited, a non-bank lender contravened section 994E(3) of the Corporations Act by failing to take reasonable steps to ensure that the distribution of its financial product, High Livez, was consistent with its target market determination (TMD).
Under the DDO regime which commenced on 5 October 2021, issuers of financial products are required to make a TMD before offering a financial product to retail clients. The TMD must describe the class of retail clients that comprises the target market for the product. The TMD must be such that it would be reasonable to conclude that if the…
