If you issue a financial product to retail investors, you must decide who the product is for before you offer it. That decision needs to be documented in a target market determination. These are the design and distribution obligations. They have been law since 5 October 2021, and they are now the most common reason the regulator stops a fund from being offered.
The obligations are in Part 7.8A of the Corporations Act 2001. In summary, an issuer must:
Distributors, including financial advisers and platforms, have their own duty to take reasonable steps to sell within the target market, and to report complaints and significant dealings outside it to the issuer.
The Australian Securities and Investments Commission (called the regulator on this page) can issue an interim stop order for 21 days, and then a final stop order, if it believes a target market determination is not appropriate. By October 2026 it had issued 99 interim stop orders and two final stop orders since the regime began. Most were against managed funds, and in 2026 many were against private credit funds.
The mistakes the regulator sees most often are:
It is specific. It names the kind of investor by objective, risk tolerance, investment horizon and how much of their money the product should represent. It says plainly who the product is not for. It explains why the product's features match that investor. Its distribution conditions are ones the issuer can actually check. Its review triggers are measurable, for example a stated level of withdrawal requests or complaints in a quarter.
I help solicitors prepare target market determinations for new funds and review existing ones against the regulator's recent stop orders. I also set up the records, the review process and the reporting arrangements with distributors that the law requires. If the regulator has raised concerns with you, I can help you respond and amend the determination before a final order is made.
Call me on 0418 998 677 if you need a target market determination prepared or reviewed.
This page contains general information only. It is not legal advice.
They require a product issuer to identify the intended market for a retail financial product, set appropriate distribution conditions, keep distribution and complaint records, monitor review triggers and take reasonable steps to keep distribution consistent with the target market.
It is a document that describes the class of investors a product is likely to suit, who it is not for, the conditions for distribution, the review periods and the events that should trigger an earlier review.
It should connect the product’s features with a specific investor profile, including objectives, risk tolerance and investment horizon. Its distribution conditions should be practical to monitor, and its review triggers should be measurable.