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In this Funds Update for 23 January 2026:
Report on CFD compliance with design and distribution obligations
On 20 January 2026, ASIC published Report 828 following a review in relation to the contracts for difference (CFD) sector. ASIC found widespread compliance weaknesses in a number of areas, including design and distribution obligations (DDO), ASIC's CFD product intervention order and derivative trade reporting requirements.
In relation to DDO, ASIC's review examined CFD issuers' questionnaires which assessed clients against the criteria in target market determinations (TMD) and tested whether the client specifically met the TMD criteria to have knowledge or experience in CFD trading. ASIC highlighted common deficiencies in these questionnaires:
- Failing to adequately address each of the criteria in the target market;
- Self-certification style questions or client declarations;
- Leading and unbalanced questions;
- Double- or triple-barrelled questions;
- No 'knock-out' questions that prevented consumers from signing up;
- Prompts in the questionnaire; and
- Failing to use available data to knock out a client.
You can find ASIC's report, REP 828 Risky business: Driving change in CFD issuers' distribution practices (here).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
