Industry codes of practice have been developed by a number of industry associations in the financial services sector. Each code sets out the service standards that you can expect when dealing with a company that subscribes to that code.
Membership of an industry code is normally voluntary.
ASIC has the power to approve codes in the financial services sector. We have released a regulatory guide (RG 183) which sets out how we will approve codes. Industry associations are not required to seek our approval of their code but may choose to do so.
We expect a code submitted for approval to satisfy the following key criteria:
freestanding and written in plain English;
comprehensive body of rules (not a single issue guideline);
enforceable against subscribers;
developed in a consultative way with key stakeholders;
effectively and independently administered;
that compliance with a code is monitored and enforced;
ASIC approves codes as set out in RG 183 and in accordance with s1101A of the Corporations Act 2001. This is a statutory power to approve voluntary industry codes of conduct.
ASIC does not have the power to mandate industry codes. Industry must decide in the first instance whether to develop a code, and then whether to have that code approved by ASIC.
Regulatory Guide 183 describes the key features of an effective codes regime that can apply to both large and small sections of the financial services industry. The policy further sets out the process by which ASIC will exercise its approvals power.
Generally, the industry codes require companies to have a fair process for dealing with complaints. If you think a company has breached the code, you should write to that company and ask for a response. If you are not happy with their response, you can contact the relevant independent complaints resolution scheme or industry associations. Ask the company which scheme it belongs to. Some industry associations can impose sanctions if a member breaches their code.
In some cases, a breach of a code may also be a breach of your contract with the financial institution, giving you a right to take legal action for breach of contract. Generally, however, it will be easier and cheaper to use a complaints resolution scheme in the first instance.
We generally cannot take enforcement action if a code is breached unless a breach of the law is also involved. However, we are interested in the operation of the codes. We would like to hear of significant non-compliance, which we may publicise in some instances. You can email us using our online question form if you are aware of a serious non-compliance by a company. Visit our consumer website, MoneySmart for information about making a complaint.