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If you’ve followed financial headlines recently, you may have seen ASIC issue stop orders against La Trobe Financial’s 12-Month Term Account. The issue wasn’t about fraud or insolvency, but something more technical — a Target Market Determination (TMD).
So what is a TMD, why does it matter, and what can we learn from the La Trobe case?
A Target Market Determination (TMD) is a document that product issuers (like banks, fund managers, and credit providers) must prepare under Australia’s Design and Distribution Obligations (DDO) regime, which came into effect in October 2021.
The purpose of a TMD is to clearly define:
Who the product is for — the types of customers who are likely to benefit from it, based on their goals, financial situation, and risk appetite.
How the product can be sold — the distribution conditions and restrictions that apply.
When it should be reviewed — the circumstances that would trigger a reassessment of whether the product is still appropriate.
How outcomes are monitored — including how distributors report back on dealings outside the target market.
A TMD doesn’t replace personalised financial advice, but it does provide a framework to reduce the risk of mis-selling and ensure products are directed to the right kinds of investors.
The DDO regime was introduced to improve consumer protection. In the past, some financial products were sold broadly without enough thought about whether they suited the investors receiving them. The result: people ended up in investments that didn’t match their needs, timeframes, or tolerance for risk.
TMDs shift some of the responsibility upstream to product issuers, requiring them to design with the end user in mind and to set guardrails on distribution. Regulators can now step in with stop orders if a product is being sold outside its target market.
In September 2025, ASIC issued interim stop orders against La Trobe’s 12-Month Term Account and 2-Year Account (both part of the La Trobe Australian Credit Fund).
ASIC’s concerns included:
Overly broad allocations: La Trobe’s TMD allowed investors to put up to 50% of their portfolio into the accounts — too high given the underlying risks.
Weak distribution conditions: ASIC felt the guardrails around how the products were sold to retail investors weren’t strong enough.
Investor misunderstanding: These accounts are often compared to “term deposits,” but they are not bank deposits. Returns aren’t guaranteed, and liquidity depends on the underlying loans in the fund.
As a result, La Trobe was temporarily banned from accepting new investments into those products. Their online portal was also taken offline while the issues were addressed.
Within a week, La Trobe made several changes and ASIC lifted the stop orders:
The maximum suggested allocation to the accounts was reduced to 25% of an investor’s portfolio.
A customer questionnaire was introduced for retail investors contributing less than $500,000, to check their alignment with the target market.
Updates were made to disclosure documents and distribution conditions.
During the stop order, La Trobe emphasised that existing investors could still receive redemptions — though new contributions were paused.
Notably, another La Trobe product, the US Private Credit Fund (Class B), remains under stop order at the time of writing.
The La Trobe case highlights some important takeaways for everyday investors:
Don’t assume all “term” products are safe: A “term account” may sound like a term deposit, but the risks can be very different. Always check the product disclosure statement (PDS) and TMD.
Watch your portfolio concentration: Even if a product is sound, investing too much in one product type can expose you to unnecessary risk.
Regulator intervention is real: ASIC now has the power to step in quickly. If a product you hold is subject to a stop order, it’s worth asking why.
Distribution controls protect you: If you’re asked to fill out a questionnaire before investing, that’s not just red tape — it’s part of making sure the product is suitable.
Target Market Determinations may not be widely understood by everyday investors, but they play a crucial role in protecting Australians from unsuitable financial products.
The La Trobe case shows how regulators are actively monitoring how investment products are structured and sold — and that intervention can happen quickly if a product is being marketed too broadly.
At Funded Futures, we believe in helping clients cut through the jargon to understand what’s really behind the investments they’re considering. If you’d like to discuss how to evaluate products like term accounts, managed funds, or private credit investments, reach out to our team today.
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