The Design and Distribution Obligations have now achieved mainstream status after ASIC targeted credit card producer American Express (Amex) for having an insufficient Target Market Determination.

ASIC launched civil proceedings against Amex after the regulator became concerned with two credit cards issued by Amex that were co-branded with retailer David Jones.

In a media release on Tuesday morning, the regulator said DDO requires credit card issuers to review TMDs to make sure it remains appropriate.

ASIC deputy chair Sarah Court said it is critical product providers respond to poor outcomes they identify by making changes.

“Product providers must monitor and review whether consumers are receiving products consistent with their needs and cannot bring a ‘set-and-forget mindset’ to product governance,” Court said.

The regulator said the case has two components: that Amex didn’t limit distribution to people looking to make purchases on credit with a card that earned points or other benefits and that cancellation for the card was higher than average.

ASIC alleged Amex knew some consumers were confused about whether they had applied for a loyalty card or a credit card.

Strong arm of the law

ASIC has issued 22 stop orders, including four other stop orders released late last week.

“This regime turned a new page in the regulation of financial products in Australia and is intended to deliver better outcomes for consumers,” Court said.

“It is a priority for ASIC to maximise these increased protections and see the long-term benefits of the DDO regime realised.”

Although ASIC struggled with the product intervention powers DDO provided, the regime had been cited by advice review lead Michelle Levy as a valuable consumer safeguard.

Last month QMV Legal senior associate Gabriela Pirana and Assured Support managing director Sean Graham spoke on the Professional Planner Principals in Practice podcast about the impact DDO is having on the industry.