In preparation for the Australian Securities and Investments Commission’s (ASIC) upcoming detailed findings being released regarding their review of Australia’s motor vehicle finance sector, the Australian Automotive Dealer Association (AADA) wishes to remind its members of their Design and Distribution Obligations (DDO).
AADA has previously developed a series of guidelines regarding the DDO regime to provide dealer context on:
- The obligations of distributors (dealer) as opposed to issuers (financiers).
- The interaction of the Point-of-Sale Exemption (PoS) between the National Consumer Credit Protection Act 2010 (Cth) and the DDO regime.
- The specific obligations of the financier as compared to the licensed motor vehicle dealer distributor in the chain of finance.
For dealers as distributors DDO introduced significant responsibilities to make sure products are offered only to consumers within the appropriate Target Market Determination (TMD).
ASIC has increasingly moved from overseeing the creation of TMDs to scrutinising ongoing compliance and governance frameworks which began on October 5, 2021. Recent enforcement action, such as against Firstmac Limited highlights ASIC’s focus on whether distributors have effective internal systems to ensure real-world compliance with DDO rather than merely having compliant documentation. This was ASIC’s first successful civil penalty action against a distributor for breaching DDO rules.
Below are the dealer core DDO’s to remind you of your responsibilities and we encourage any dealer to contact their motor vehicle finance providers on all areas connected with the DDO.
Dealers are encouraged to seek their own legal or financial advice on how to ensure they are remaining compliant with the DDO. AADA will provide further information to dealers once ASIC’s review is released and we will include information on how lenders have responded to ASIC’s prior recommendations.