Target Market Determinations

What is a Target Market Determination?

A target market determination is a document that describes the type of customer who may suit one of our products – based on their needs, objectives and financial situation (target market). It also sets out who can distribute our products, how they can do this, and situations when we may need to review our products and the target market.

Why is a Target Market Determination needed?

From 5 October 2021, all issuers and distributors of retail financial products need to comply with a new law under the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 (‘Design and Distribution Obligations’). It requires us, amongst other things, to have Target Market Determinations for our products

This framework helps ensure that investors are at the centre of the approach to how financial products are designed and distributed.

Our Target Market Determinations

Generation Life has issued target market determinations for the following products.

Generation Life LifeBuilder


Generation Life ChildBuilder


Generation Life FuneralBond


Generation Life Tax Effective Equity Income Fund Wholesale Class D


Generation Life Tax Effective Equity Income Fund Retail Class


 

What are Generation Life’s key obligations as a product issuer?

The new design obligations applicable to us include:

  • making a Target Market Determination for all open products
  • reviewing Target Market Determinations for appropriateness
  • keeping records about Target Market Determinations
  • taking reasonable steps to ensure the distribution of a product is consistent with its Target Market Determination
  • notifying ASIC if we become aware that a significant dealing outside the Target Market Determination has occurred.

What are the key obligations of financial advisers?

Financial advisers have distribution obligations including: 

  • ensuring there is an appropriate Target Market Determination for retail products they distribute.
  • following the distribution conditions and reporting requirements set out in a product’s Target Market Determination, including reporting on the number of complaints relating to the product design, availability and distribution (even where no complaints are received)
  • taking reasonable steps to ensure distribution of the product is consistent with the Target Market Determination
  • collecting, keeping and providing distribution information
  • notifying Generation Life of any significant dealings not consistent with a product’s Target Market Determination.

I am a distributor of a Generation Life product, what do I need to do?

As a distributor of retail financial products you are expected to:

  • understand the target market defined in a Target Market Determination and take reasonable steps to ensure the product is distributed in accordance with its Target Market Determination
  • understand and adhere to any distribution conditions contained in the Target Market Determination
  • report on information as specified in the Target Market Determination, at the required frequency and in the required form, including reporting on the number of complaints relating to the product design, availability and distribution (even where no complaints are received)
  • keep accurate records of the reasonable steps taken and any information provided to us
  • report to us where you believe a significant dealing in our products has occurred which is inconsistent with the product’s Target Market Determination.

What are the ongoing reporting obligations of distributors?

You will be required to advise us on a quarterly basis (within 10 business days) if you have received any complaints relating to the design, features, availability or distribution of our products. Where no complaints have been recorded you will still need to report that no complaints have been recorded. If there is any general feedback, this should also be reported.

If there have been any significant dealings outside of a product’s Target Market Determination you must advise us as soon as practicable but no later than 10 business days after becoming aware of the significant dealing.

Distributors should, where possible, adopt the Financial Services Council (‘FSC’) data standards for reports to Generation Life.

We are in the process of providing a solution so that distributors can provide this information to us quickly and securely. We are considering a streamlined reporting solution that aligns with the FSC data standards template with the intention to simplify and support the reporting process for advisers.

We will update this page once further details are available.

What is a ‘significant dealing’?

There is no common industry standard for what a ‘significant dealing’ constitutes, and what will be considered a significant dealing will vary between distributors. In determining whether a significant dealing has occurred a distributor should consider, amongst other things:

  • the number of dealings outside the Target Market Determination or the proportion of total dealings
  • the quantum of a dealing’s variance to the Target Market Determination, i.e. how far from the identified target market is the customer.

We are finalising requirements in terms of how distributors will report significant dealings, however, distributors themselves need to decide what ‘significant dealings’ are. We will provide further information once requirements are confirmed.

Is personal advice exempt from the Design and Distribution Obligations?

Under the Design and Distribution Obligations, personal financial advice is excluded recognising that it may be appropriate to recommend a product to a customer that is outside the target market where it is considered to be in their best interests. 

As part of ensuring we meet our obligations, Generation Life requires financial advisers, where the personal advice exemption is being relied on, to make an attestation or confirmation which confirms that:

  • the Target Market Determination was taken into account
  • that personal financial advice was provided
  • some details of the reason for recommending the product.

This will be integrated into our application process.