Personal Loan Target Market Determination

Last Updated 30 September, 2021

Issuer

Alex Bank Pty Ltd ABN 13 627 244 848, Australian Financial Services Licence and Australian Credit Licence 510805 (Alex, We, Us or Our).

1. Target Market

  1.  This Target Market Determination (TMD) sets out the target market for our Personal Loan product.
  2. Our product is 100% digital and has been designed to have a personalised interest rate based on your individual financial situation.
  3. This product is suitable for customers who are seeking a personal loan for a range of life events and expenses, such as:
    1. Renovations
    2. Buying a motor vehicle or sport or recreational vehicle
    3. Home improvements
    4. Debt consolidations
    5. Holidays
    6. Studying
    7. Medical
  4. The key features of this product include no monthly fees, flexible repayment frequency, flexible loan term, fixed interest rate and no fees for extra repayments or paying the loan off early.[1]
  5. Customers must satisfy the following criteria to be eligible to apply for this product:
    1. Be a person over 18 years of age at the date of application;
    2. Be an Australian Citizen or Australian Permanent Resident;
    3. Be residing in Australia at the time of the application; and
    4. Not be over 65 years of age (unless we receive a satisfactory loan repayment proposal).
  6. We will make reasonable enquiries about the customer’s requirements and objectives. However, we recommend the customer consider whether their objectives and requirements align with the features and suitability of the product.[2]
  7. We will also make reasonable enquiries about the customer’s financial situation. To assess whether the loan is affordable to the customer, we will consider the customer’s employment, income, living expenses, automotive expenses, discretionary expenses, other debts, credit history, specific life events, temporary difficulties and any information that will assist us to understand the customer’s full financial position.[3]
  8. This product is not suitable for those who are seeking a flexible interest rate, additional features (i.e. redraw facility and loan splits) or a joint personal loan.
  9. We will not accept applications for loan purposes including:
    1. General spending (no specified purpose)
    2. Gambling
    3. Investment in residential or commercial property or small business or shares
    4. Outstanding generic bills, Centrelink debt, tax bills, legal bills or small amount credit contracts and buy now pay later arrangements.
  10. The Alex Personal Loan product is subject to our Lending Policy.

2. Distribution Conditions

  1. We have placed conditions and restrictions on the distribution of the product to ensure it is distributed to customers within the target market.[4]
  2. We have designed this product to be distributed by:
    1. visiting our website www.alex.bank;
    2. contacting our representatives directly; or
    3. contacting our authorised brokers.
  3. To further ensure the product is distributed to customers in the target market, we have: [5]
    1. implemented targeted advertisement;
    2. provided specific content about the product on our website that is consistent with this TMD;
    3. ensured our representatives are adequately trained to understand the customers this product has been designed for; and
    4. provided guidance for our brokers.
  4. We have taken steps to ensure that our remuneration and incentive structures for this product do not result in distribution that is inconsistent with the TMD.[6]
  5. We supervise the distribution of the product through monitoring the process of each application and collecting any relevant data. We will provide sufficient information to our brokers to assist them with meeting their obligations to ensure distribution of the product is consistent with this TMD.
  6. If we become aware that the distribution conditions are inadequate, where for example, significant distribution is occurring outside the target market, we will:
    1. amend the TMD to set out additional distribution conditions to ensure that such event does not occur; or
    2. cease distribution of the product.[7]

3. Review Triggers

  1. There may be events and circumstances (called ‘review triggers’) that would reasonably suggest that this TMD is no longer appropriate such as: [8]
    1. we receive a significant number of applicants from outside the target market;
    2. we make a material change to the product;
    3. we notice a significant increase in events of defaults;[9]
    4. we introduce promotional features that materially changes the product;
    5. we receive a significant number of Risk Appetite Statements breaches;
    6. we receive a significant number of negative reviews via platforms such as Google, Facebook and Product Review;
    7. internal complaints or notice of complaints made to Australian Financial Complaints Authority;[10] and
    8. the nature of complaints and complaint trends.[11]
  2. We will review this TMD within 10 business days if we know or reasonably know, that a review trigger has occurred.[12]

4. Review Periods

  1. We will review this TMD on 5 October 2022 to ensure it remains appropriate. Subsequent periodic reviews will occur annually.[13]
  2. We will also review this TMD in response to any review triggers or other events or circumstances that would reasonably suggest that this TMD is no longer appropriate [14]
  3. Where we become aware of information that would reasonably suggest that this TMD is no longer appropriate, we will stop issuing the product until we have had the chance to review the product along with this TMD.[15]
  4. We will notify the Australian Securities and Investments Commission within 10 business days of us becoming aware of a significant dealing in the product that is not consistent with this TMD.[16]
  5. We will integrate the review process into our product governance arrangements, and controls will be put in place to ensure that meaningful reviews take place.[17] Possible outcomes from the review process include:
    1. no change to the way the product is distributed;[18]
    2. changing the product design, target market or distribution;[19] or
    3. ceasing to distribute the product.[20]

5. Distribution Information Reporting Requirements

  1. We understand complaints, events of defaults and general feedback about the product are useful indicators of whether this TMD is still appropriate.[21]
  2. Where Alex engages representatives to distribute this product, we require our representatives to promptly provide us with information in relation to any complaints and general feedback received, to allow us to review this TMD.
  3. Our representatives are required to provide the following information:[22]
    Type of Information Description Reporting Period
    Complaint / Significant Dealings / Others The following information is required:

    1. Representative name
    2. Date of complaint
    3. Product
    4. Nature of the complaint
    5. AFCA status (if applicable)
    Complaint / Others – As soon as complaint is received by the representative.

    Significant Dealings – As soon as practicable, and in any case within 10 business days after becoming aware.

  1. RG 274.76 and RG 274.68(b) of the Product Design and Distribution Obligations.
  2. RG 274.76 of the Product Design and Distribution Obligations.
  3. RG 274.47(b) of the Product Design and Distribution Obligations.
  4. RG 274.96 of the Product Design and Distribution Obligations; Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 s 994B(5)(c).
  5. RG 274.146 (Table 4) of the Product Design and Distribution Obligations.
  6. RG 274.146 (Table 4) of the Product Design and Distribution Obligations.
  7. RG 274.99 of the Product Design and Distribution Obligations.
  8. RG 274.102 of the Product Design and Distribution Obligations; Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 s 994B(5)(d).
  9. RG 274.103(a) of the Product Design and Distribution Obligations.
  10. RG 274.104(c) of the Product Design and Distribution Obligations.
  11. Derived from RG 274.107 (Example 6) of the Product Design and Distribution Obligations.
  12. Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 s 994C(3).
  13. RG 274.108 of the Product Design and Distribution Obligations.
  14. RG 274.148 of the Product Design and Distribution Obligations.
  15. RG 274.153 of the Product Design and Distribution Obligations.
  16. RG 274.157 of the Product Design and Distribution Obligations; Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 s 994F(6); RG 274.159 contains the relevant factors that will assist Alex to determine whether a significant dealing has occurred.
  17. RG 274.150 of the Product Design and Distribution Obligations.
  18. RG 274.150(a) of the Product Design and Distribution Obligations.
  19. RG 274.150(b) of the Product Design and Distribution Obligations.
  20. RG 274.150(c) of the Product Design and Distribution Obligations.
  21. RG 274.117 of the Product Design and Distribution Obligations.
  22. Derived timeframe from RG 274.117 of the Product Design and Distribution Obligations.