July 19 (Reuters) - The Federal Court of Australia fined

a local unit of American Express ( AXP ) A$8 million

($5.36 million) for breaching design and distribution rules for

two of its co-branded credit cards, the Australian corporate

regulator said on Friday.

The court found that American Express Australia distributed

two credit cards primarily to customers in stores of luxury

brand David Jones between late May and early July in 2022

without appropriately determining the target market.

"A penalty of this order ensures it has a 'sting'

sufficient to deter both repetition by American Express ( AXP ) and

contravention by other providers of financial products, and one

that goes beyond being a mere 'cost of doing business'," Federal

Court Justice Ian McNeil Jackman said.

AmEx Australia ought to have known high cancelled

application rates suggested the target market determinations

(TMDs) for the cards were no longer appropriate, the Australian

Securities & Investments Commission (ASIC) said in its

statement.

AmEx did not stop issuing the credit cards when it had

not reviewed the TMDs, the regulator added.

A TMD is a document that describes who a product is

appropriate for (target market), and any conditions around how

that product can be distributed to customers.

($1 = 1.4919 Australian dollars)