6.4 The proposed model: Codes more broadly

As noted above, in setting out this model for enforceable code provisions, I do not intend to interfere with the broader development of, or operation of, industry codes. Nor do I intend to modify or limit ASIC’s powers to approve the non-enforceable provisions of industry codes. With that said, I consider that the law should be amended to provide 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.

I draw attention to this point because I consider it important that the banking industry, and (as I will come to) the insurance industry, continue to develop their industry codes over time. I expect that the non-enforceable provisions of industry codes will continue to play an important role in setting standards of behaviour within those industries over time.

Similarly, as will be apparent from what I have said, subject to the caveat with respect to insurance that I deal with in the appropriate chapter, I do not consider that any amendment should be made to the basic structure of internal and external dispute resolution.

Recommendation 1.15 – Enforceable code provisions

The law should be amended to provide:

  • that ASIC’s power to approve codes of conduct extends to codes relating to all APRA-regulated institutions and 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 Competition and Consumer Act, for breach of an ‘enforceable code provision’; and
  • for the establishment and imposition of mandatory financial services industry codes.

Recommendation 1.16 – 2019 Banking Code

In respect of the Banking Code that ASIC approved in 2018, the ABA and ASIC should take all necessary steps to have the provisions that govern the terms of the contract made or to be made between the bank and the customer or guarantor designated as ‘enforceable code provisions’.