The consultation is in response to Recommendation 1.15 of the Hayne commission’s final report to enhance the current approved codes framework in the Corporations Act 2001, Treasurer Josh Frydenberg said in a statement.
The report noted that “there must be adequate means to identify, correct and prevent systemic failures in applying the code”, and that “in order to do that, some provisions of the codes should be picked up and applied as law”.
The government also said it would amend the law to allow:
- ASIC to approve codes for a wider range of entities than currently possible;
- ASIC-approved codes to include ‘enforceable code provisions’, contravention of which constitutes a breach of the law and with remedies modelled on those in the Competition and Consumer Act 2010; and
- ASIC to take into account whether particular provisions of an industry code have been designated as enforceable code provisions in determining whether to approve a code.
Mr Frydenberg said that through these changes, it will also be made clear that certain promises made in codes are enforceable against financial services firms by consumers.
“As further recommended by commissioner Hayne, to deal with the case where an industry does not put forward its proposed enforceable code provisions in a timely manner, mandatory financial services industry codes will be able to be imposed by the government,” Mr Frydenberg said.
“In his report, commissioner Hayne also noted the benefits of voluntary codes in harnessing the views and collective will of industry. The government continues to support and encourage industry to develop voluntary codes that go beyond the requirements in the law.”
Last month, the Australian Banking Association announced it would revamp its Banking Code of Practice in response to the Hayne royal commission final report.
ASIC approved the code last year, introducing a range of new measures that will make banking easier to understand and will focus on the customer.
Further, the code is enforceable through the courts and the Australian Financial Complaints Authority as it forms part of a customer’s contract with the bank.
