ASIC observations on Target Market Determinations (TMDs)

ASIC's recent observations in relation to the Target Market Determinations ("TMD") of superannuation funds reiterates the importance for all licensees to review and improve the effectiveness of their TMDs.

A TMD is required to be implemented by any licensee who issues certain financial products to retail clients. TMDs must be clear, well-designed and include appropriate review triggers and controls.

A Summary of ASIC's Commentary

As part of ASIC's sample review of superannuation trustees' TMDs, it was found that some licensees are implementing poor practices. ASIC's commentary on the TMDs which formed part of their review stated that licensees should:

• Define the target market for the financial product:
  • ASIC noted that those licensees who defined their target market in a specific manner, including factors like age, occupation or industry, minimum investment balance, insurance needs (amongst other things) demonstrated a better understanding of their