Treasury has published a Consultation paper on the Enforceability of financial services industry codes following the recommendation of the Financial Services Royal Commission that certain provisions of financial sector codes should be ‘enforceable code provisions’.
In its response to the Royal Commission, the Government agreed to this recommendation to provide the Australian Securities and Investments Commission (ASIC) with additional powers to approve and enforce code provisions.
Recommendation 1.15 of the Final Report proposed that the law should be amended to provide:
• that ASIC’s power to approve codes of conduct extends to codes relating to all Australian Prudential Regulation Authority (APRA)-regulated institutions and Australian Credit Licence (ACL) holders;
• that industry codes of conduct approved by ASIC may include ‘enforceable code provisions’, which are provisions in respect of which a contravention will constitute a breach of the law;
• that ASIC may take into consideration whether particular provisions of an industry code of conduct have been designated as ‘enforceable code provisions’ in determining whether to approve a code;
• for remedies, modelled on those now set out in Part VI of the CCA, for breach of an ‘enforceable code provision’; and
• for the establishment and imposition of mandatory financial services industry codes.
Currently, there are 12 codes in the financial services industry. The codes are:
• Code of Banking Practice;
• Customer Owned Banking Code of Practice ;
• Financial Planning Association of Australia’s Code of Professional Practice;
• General Insurance Code of Practice;
• ePayments Code;
• National Insurance Brokers Association’s Insurance Brokers Code of Practice;
• Mortgage and Finance Association of Australia’s Code of Practice;
• Finance Brokers Association of Australia’s Code of Conduct;
• Australian Collectors and Debt Buyers Association Code of Practice;
• Insurance in Superannuation Voluntary Code of Practice;
• Financial Services Council’s Life Insurance Code of Practice; and
• Financial Planning Association Professional Ongoing Fees Code.