The RG provides specific example review triggers for managed investment schemes which include the product’s liquidity, performance relative to objectives and benchmarks, and increases in fund outflows. These are review triggers that we have already seen many managers include in their TMDs, however, it is still useful for organisations to have confirmation of their approach.

The final guidance has confirmed that issuers of investment products should not assume that consumers will hold the product as part of a diversified portfolio. Reliance on portfolio diversification has not been a common approach across the industry, however this confirmation reemphasises the need for issuers to critically assess the risk of consumers obtaining the product on a standalone basis as well as the value it offers. Issuers should take reasonable steps (which would be tailored to the product type and distribution strategy) to prevent distribution outside of the target market.

The RG has confirmed that investment options and insurance components of Choice superannuation products are key attributes that could affect the class of customers for whom the product is appropriate.

ASIC expects that in the case of investment options, trustees are likely to need a single TMD for the superannuation product that includes sub-markets for individual investment options or groups of options.

Trustees will also need to consider whether the inclusion of insurance changes the target market class of customers for the product. In particular, ASIC expects trustees to consider members for whom insurance is unlikely to be appropriate. The attributes and eligibility criteria of the insurance component should also flow through to the distribution conditions articulated within the TMD.

ASIC has provided specific guidance for the issuers and distributors of exchange traded funds (ETF) to reflect their distribution on financial markets.

ETF issuers will still be required to produce a TMD but will not need to cease on-market distribution of the product if that TMD becomes inappropriate. In addition, the issuer, in fulfilling its reasonable steps obligation, will not be required to ensure each on-market transaction is consistent with the TMD (although it is still expected that issuers will monitor the conduct of brokers).

Distributors will only be required to comply with obligations to report complaint information and any other information that an issuer specifies in the TMD.