Target Market Determination – Construction

Product Construction
Issuer Adelaide Bank a Division of Bendigo and Adelaide Bank Limited ABN 11 068 049 178 Australian Credit Licence Number 237879, GPO Box 1048, Adelaide SA 5001.
Effective Date of TMD 5 October 2021
TMD Version 2021.2
About this TMD This Target Market Determination (TMD) document describes the class of consumers that Adelaide Bank has designed this product for, being the target market and the conditions (if any) around how the product is distributed to consumers. When considering the target market, Columbus focused on our consumer target market’s objectives and needs.

This TMD is not intended to provide you with financial advice nor is it a substitute for the product’s terms and conditions or other disclosure documents. Please refer to our Terms and Conditions and Credit Guide before deciding product suitability. Our product terms and conditions will be provided to you upon request.
Description of the Product, Including Key Attributes
  • Variable interest rate
  • Repayment options:
    • principle and interest; or
    • interest only
  • Redraw available
  • Minimum loan size: $50,000
  • Maximum Loan Size: $2,000,000 (subject to LVR and postcode policy)
  • Maximum LVR:
    • 80% for Inner-City postcodes
    • 90% for Regional postcodes
    • 95% for Metro and Non-Metro postcodes
  • Offset facility is available
  • Construction fee is payable
Description of the target market The features of this product have been assessed as meeting the likely objectives, financial situation and needs of consumers who:

    • are:
      • at least 18 years old;
      • individual borrowers (as single or joint borrowers); and
      • an Australian citizen or a permanent Australian resident;
    • require a loan build a new owner-occupied home, renovate or demolish and rebuild an owner-occupied property
    • Interest Only option available during construction phase (max 12 months) reverting to Principal & Interest
    • require an offset account
    • require the flexibility of a variable interest rate
    • require the ability to make additional extra repayments without penalty; and
    • want the option of either principal and interest or interest only repayments
    • satisfy our eligibility criteria

Although variable interest rates fluctuate, the product meets the likely objectives, financial situation and needs of consumers in the target market because it allows them to deposit funds into an offset account and/or make additional payments directly into the loan to reduce the amount of interest payable whilst maintaining the ability to draw on surplus funds when required. This product also allows consumers to select interest only or principal and interest repayments in order to reduce their overall debt and build equity.
Ineligible consumers This product may not be suitable for consumers who:

  • do not meet the eligibility requirements;
  • are seeking the certainty of fixed repayments over the term of the loan;
  • are looking to purchase or refinance a residential investment property; or
  • require the ability to provide alternative methods of income verification.
Distribution Channels Columbus has oversight over how the product is promoted and issued. The following distribution channels and conditions have been assessed as being appropriate to direct the distribution of the product to the target market:

  • Direct
    • Online
    • By phone
    • In person (e.g. branch, agency, or premises visit)
  • Third party – Accredited mortgage brokers subject to their Best Interests Duty (BID) obligations

The distribution channels and conditions are appropriate because:

  • the product has a wide target market;
  • our staff have the necessary training, knowledge and accreditation (if required) to assess whether the consumer is within the target market. All of our staff must continually satisfy annual compliance reviews.
  • we rely on existing distributors, methods, controls and supervision already in place;
  • our approval system has checks and controls in place to flag applicants who may be outside the target market; and
  • accredited mortgage brokers are subject to BID to ensure that the product is in the best interests of the particular consumer.
Distribution conditions A distributor must:

  • Hold an Australian Credit Licence or be a Credit Representative authorised to engage in credit activities on behalf of a credit licensee; and
  • Comply with the terms and conditions of any relevant distribution agreement or arrangement with the Product Manager.

This condition ensures distributors are appropriately authorised to provide the relevant regulated financial services and will comply with the commercial terms agreed between the distributor and Product Manager.

This condition applies to all conduct by the distributor.

Adelaide Bank has outlined below its review triggers of this product. This TMD will also be reviewed if an event or circumstance has occurred that would reasonably suggest that the TMD may no longer be appropriate. Our review triggers of this product are:

Initial review Within 12 months of the date of this TMD
Periodic review Each year on the anniversary of this TMD.
Review triggers Specific events will prompt Columbus to review this TMD, which includes:

  • A significant dealing of the product to consumers outside the target market occurs;
  • Unexpected trends in consumer outcomes which are significantly inconsistent with the intended product performance;
  • A significant number of material complaints are received from consumers in relation to the product;
  • Unexpected early stage arrears are detected;
  • A significant number of defaults occur;
  • A significant breach has occurred in connection with the issuing and distribution of this product;
  • A significant number of late repayments are being recorded;
  • A material change is made to this product;
  • Evidence that the product or distributor conduct are significantly different to the target market; or
  • The receipt of a product intervention power order from ASIC requiring us to immediately cease retail product distribution conduct in respect of the product.

If a review trigger occurs, we will complete a review of the TMD within ten business days. Meanwhile, we will cease to offer this product to our customers until our TMD review concludes and any necessary changes to the product or TMD, including distribution methods, are made.
The following data must be provided to us by any person who engages in retail product distribution conduct in relation to this product:

Type of information Description Reporting period
Complaints Number of complaints, details of the complaint, including name and contact details of complainant and substance of the complaint As soon as practicable and within 10 business days following the end of a calendar quarter
Significant dealing(s) Date or date range of the significant dealing(s) and description of the significant dealing (eg, why it is not consistent with the TMD) As soon as practicable, and in any case within 10 business days after becoming aware
Feedback Details of any suggested feedback and improvements As soon as practicable, and in any case within 10 business days after becoming aware
Information requested Any other information requested by the Product Manager As soon as practicable, and in any case within 10 business days after receiving such request