What Is a Target Market Determination for a Loan?

When you are comparing loans, you may come across a document called a Target Market Determination, usually shortened to TMD.

The name sounds technical, but the basic idea is straightforward. A TMD explains the broad type of consumer a financial product has been designed for, how the product should be distributed and when the issuer needs to review whether the determination remains appropriate.

A TMD can provide useful information when you are researching a loan. However, it does not mean a particular loan is automatically suitable for you, and being within the target market does not guarantee that your application will be approved.

What Is a Target Market Determination?

A Target Market Determination is a written, publicly available document that identifies the class of consumers for whom a financial product is likely to be appropriate.

That target market is determined by considering consumers’ likely objectives, financial situations and needs as a group. The TMD also contains information about how the product should be distributed and when the determination should be reviewed.

Depending on the loan, a TMD may cover matters such as:

• The loan amounts and terms available.
• The types of expenses the loan has been designed to cover.
• Whether the loan is secured or unsecured.
• Income or affordability characteristics of the target market.
• Consumers or purposes that fall outside the target market.
• Conditions applying to the way the product is marketed and distributed.
• Circumstances that may trigger a review of the TMD.

The product issuer is responsible for preparing the TMD.

Why Do Lenders Publish TMDs?

Target Market Determinations form part of Australia’s design and distribution obligations, commonly called DDOs.

The DDO regime commenced on 5 October 2021. It requires issuers and distributors of covered financial products to take a consumer-focused approach to product design and distribution.

In practical terms, this means an issuer must consider which class of consumers a product is likely to be appropriate for and take reasonable steps to support distribution that is consistent with that target market.

ASIC explains that a TMD describes the class of consumers making up a product’s target market and also deals with matters relevant to distribution and review.

The broader purpose is to reduce the risk of products being designed, marketed or distributed to people whose likely objectives, financial situations and needs do not align with the product.

What Information Does a Loan TMD Usually Contain?

The exact contents depend on the product, but there are several areas you will commonly see.

The Intended Target Market

This section describes the general characteristics of the people for whom the product has been designed.

For example, a target market may include people who:

• Need to borrow within a particular amount range.
• Want a particular type of interest rate or repayment structure.
• Require finance for personal rather than business purposes.
• Want to repay the loan within a defined period.
• Have sufficient income to make the repayments without hardship.
• Do not want to provide an asset as security.

These are characteristics of a group. They are not a personal assessment of whether a loan is appropriate for you.

Consumers Outside the Target Market

A TMD may also identify characteristics or circumstances that are inconsistent with the product’s intended market.

Depending on the product, this might include situations where you:

• Need a loan amount or term outside the available range.
• Want to use the money for an excluded purpose.
• Need business rather than personal finance.
• Could not make the repayments without hardship.
• Need ongoing finance to cover ordinary living expenses.
• Require features the product does not provide.

Being outside the target market for one product does not automatically mean all loans are unsuitable for you. It means that particular product was not designed for consumers with those characteristics.

Distribution Conditions

Distribution conditions explain how a product should be marketed and made available.

They may cover matters such as:

• Where or how the loan can be advertised.
• What information needs to be collected during an application.
• Eligibility and screening processes.
• Conditions applying to referral partners.
• How applications outside the target market are identified.
• Controls designed to keep distribution consistent with the TMD.

These conditions are part of the product governance process rather than an individual approval decision.

Review Periods and Review Triggers

A TMD is not intended to be prepared once and then ignored.

The issuer must monitor the product and review whether its TMD remains appropriate. The TMD itself should explain the relevant review arrangements.

Depending on the product, a review might be triggered by factors such as increased complaints, defaults, hardship applications, distribution outside the target market or other information indicating that the product or its distribution may need to be reconsidered.

Does Being in the Target Market Mean You Will Be Approved?

No.

A TMD considers a class of consumers. It is not an approval checklist and does not replace the assessment of your individual circumstances.

When you apply with us, we still need to assess your application. Our responsible lending obligations require us to:

• Make reasonable inquiries about your requirements and objectives.
• Make reasonable inquiries about your financial situation.
• Take reasonable steps to verify your financial situation.
• Assess whether the proposed credit contract would be unsuitable.
• Not provide you with credit that is unsuitable.

Depending on your circumstances, the assessment may take into account information about your income, expenses, existing debts, financial commitments, reason for borrowing and capacity to meet the proposed repayments.

You may broadly fall within our product’s target market but still not qualify for a loan or have your application approved.

Likewise, meeting our minimum eligibility requirements does not guarantee approval.

You can review our current loan eligibility information before deciding whether to apply.

Is a TMD the Same as Responsible Lending?

No. They are related consumer protection concepts, but they operate differently.

A Target Market Determination is concerned with whether a product has been designed and distributed for an appropriate class of consumers.

A responsible lending assessment focuses on your individual credit application and circumstances.

A useful way to distinguish them is:

Our Credit Guide explains our responsible lending obligations in more detail.

A TMD therefore does not replace our eligibility checks, responsible lending assessment, Credit Guide or the terms of your credit contract.

How Should You Use a TMD When Comparing Loans?

A TMD can provide useful context before you apply, but it should be read alongside the rest of the product information.

1. Check the Intended Purpose

Start by looking at whether the product has been designed for the type of expense you need to cover.

For example, a personal loan intended for an infrequent or one-off expense may not be designed as an ongoing source of money for ordinary household costs.

When your regular living expenses have become unaffordable, adding another repayment obligation may not address the underlying problem. It may be more appropriate to speak with your service provider about hardship assistance or contact a free financial counsellor.

2. Review the Loan Amount and Term

Check that the available amount and repayment period are consistent with what you actually need.

Borrowing more than necessary generally means taking on a larger repayment obligation. At the same time, a shorter repayment period can result in higher individual repayments.

Consider the amount you genuinely need and whether the scheduled repayments would remain manageable alongside your essential living costs.

3. Look at the Product’s Important Features

Depending on the loan, check features such as:

• The interest rate.
• Establishment or application fees.
• Regular account fees.
• Fees that may apply after a missed payment.
• Whether security is required.
• Whether you can repay early.
• Restrictions on what the money can be used for.

A TMD provides useful product context, but it is not a substitute for reviewing the current costs, disclosures and proposed credit contract.

4. Check Whether You May Be Outside the Target Market

Read the exclusions and distribution conditions carefully.

For example, a product may not be intended for business expenses, regular ongoing ordinary household expenses or people who cannot afford the repayments without hardship.

These details can help you decide whether it makes sense to investigate the product further before completing an application.

5. Consider Your Own Financial Circumstances

Even when a product has been designed for people with broadly similar needs, that does not mean it will be right for your individual circumstances.

Before borrowing, consider:

• Whether the expense can be delayed.
• Whether you have savings that could cover some or all of it.
• Whether the supplier offers a payment plan.
• Whether every repayment would fit within your budget.
• Whether you could still pay for essentials.
• How you would manage an unexpected change in income or expenses.
• The total amount you would be required to repay.

A TMD is one piece of information. Your own financial position still matters.

What Does Our Target Market Determination Say?

We publish a Target Market Determination for our Medium Amount Credit Contract product.

Our current TMD describes a target market that includes people seeking between $2,050 and $3,500 for personal, non-business purposes.

It identifies purposes including infrequent and sometimes unforeseeable expenses, major items of personal property and certain one-off discretionary expenses. It also requires consumers in the target market to be able to afford repayments without hardship and to have reliable net income meeting the level stated in the TMD.

Our TMD excludes regular, ongoing ordinary household expenses such as utilities, except when the purpose is to pay accumulated arrears or unusually high amounts resulting from special circumstances. Business purposes are also outside the target market.

You should read the complete TMD rather than relying only on this summary.

Our Current Loan Features

Our unsecured Medium Amount Credit Contract currently has the following key features:

Current costs and conditions can change, so you should review our loan costs and eligibility requirements before deciding whether to apply.

Applications remain subject to eligibility, assessment and approval.

Questions to Ask Before Applying for a Loan

A TMD can be a helpful starting point, but it should be considered alongside the full product information and your own circumstances.

Before applying, ask yourself:

• Is this a one-off or infrequent expense rather than an ongoing gap in my budget?
• Does the product’s intended purpose match my reason for borrowing?
• Can I afford every repayment while continuing to meet my essential living costs?
• Have I checked the interest, fees and repayment obligations?
• Could I use savings, delay the purchase or arrange a payment plan instead?
• What would happen if my income decreased or my expenses increased?
• Have I read the eligibility information, TMD, Credit Guide and proposed contract?

When repayments may cause financial hardship, borrowing may not be appropriate.

Free and confidential financial counselling is available through the National Debt Helpline on 1800 007 007.

Frequently Asked Questions

Is a Target Market Determination Financial Advice?

No.

A TMD describes the broad class of consumers for whom a product is likely to be appropriate. It does not assess all of your individual circumstances and should not be treated as personal financial advice.

Does Every Loan Have a Target Market Determination?

Not necessarily.

Australia’s design and distribution obligations apply to covered financial products, but the regime includes exclusions and exemptions. When you are considering a particular loan, check the provider’s product information for the relevant TMD.

Can I Apply if I Am Outside the Target Market?

That depends on the product and its distribution conditions.

A product’s distribution arrangements may prevent it from being offered when the relevant target market conditions are not met.

Our own TMD sets out the distribution conditions that apply to our Medium Amount Credit Contract product.

Is a TMD the Same as a Loan Contract?

No.

A TMD describes the intended market and the product’s distribution and review arrangements.

Your credit contract sets out the specific terms applying to your loan, such as the amount borrowed, applicable interest and fees, repayment schedule and your contractual obligations.

Does Meeting the TMD Requirements Guarantee Approval?

No.

Our TMD is not an approval checklist. We assess applications individually, and applications are subject to our eligibility requirements, assessment and approval.

Where Can I Find a Lender’s TMD?

TMDs are publicly available documents and are commonly published on an issuer’s website.

You can read our current Target Market Determination online.

Read the Product Information Before Deciding

A Target Market Determination can help you understand the type of consumer a loan was designed for and how the product is intended to be distributed. However, it is only one part of the information you should consider.

Before deciding whether borrowing is appropriate for you, review our TMD, eligibility requirements, loan costs and Credit Guide. Consider the available alternatives and whether the repayments would remain manageable alongside your essential expenses.

If you believe our loan may be appropriate for your circumstances, you can review our eligibility requirements before applying.

Applications are subject to eligibility, assessment and approval.

The information provided in this blog is for general informational purposes only and does not constitute financial advice. It is not tailored to the specific circumstances of any individual. Before acting on the information, you should consider whether it is appropriate for you, having regard to your objectives, financial situation and needs.