As part of the Design and Distribution Obligations (“DDO”), distributors are required to report significant dealings outside of target market within the required timeframe as soon as they are aware, as well as provide quarterly reporting to Capital Group on all dealings outside the target market and complaints.
Please find Capital Group reporting instructions below, supplementing the distributor reporting requirements set out in the target market determinations (TMD) of each Capital Group Fund. Please contact Client_Operations@capgroup.com if you have any questions.
Distributors are required to report significant dealings outside the target market no later than 10 business days after becoming aware of the significant dealing. Distributors have discretion to apply its ordinary meaning to define a “significant” deal.
Section 994F(6) of the Act requires distributors to notify the issuer if they become aware of a significant dealing in the product that is not consistent with the TMD. Neither the Act nor ASIC defines when a dealing is ‘significant’ and distributors have discretion to apply its ordinary meaning.
The issuer will rely on notifications of significant dealings to monitor and review the product, this TMD, and its distribution strategy, and to meet its own obligation to report significant dealings to ASIC.
Dealings outside this TMD may be significant because:
they represent a material proportion of the overall distribution conduct carried out by the distributor in relation to the product, or
they constitute an individual transaction which has resulted in, or will or is likely to result in, significant detriment to the consumer (or class of consumer).
In each case, the distributor should have regard to:
the nature and risk profile of the product (which may be indicated by the product’s risk rating or withdrawal timeframes),
the actual or potential harm to a consumer (which may be indicated by the value of the consumer’s investment, their intended product use or their ability to bear loss), and
the nature and extent of the inconsistency of distribution with the TMD (which may be indicated by the number of red or amber ratings attributed to the consumer).
Objectively, a distributor may consider a dealing (or group of dealings) outside the TMD to be significant if:
it constitutes more than half of the distributor’s total retail product distribution conduct in relation to the product over the reporting period,
the consumer’s intended product use is Solution / Standalone, or
the consumer’s intended product use is Core component and the consumer’s risk (ability to bear loss) and return profile is Low.
Distributors are required to report dealings outside the target market within 10 business days following the end of each calendar quarter. The information for each reported dealing should include the reason why the acquisition is outside of target market and whether the acquisition occurred under personal advice.
Distributors are required to provide information on complaints within 10 business days following the end of each calendar quarter. The required information should include the number of complaints received, substance of complaints and general feedback relating to the product and its performance.