The Australian Securities and Investments Commission (ASIC) has issued a new Policy Statement [PS 183] Approval of financial services sector codes of conduct, which sets out how ASIC will approve codes in accordance with section 1101A of the Corporations Act 2001 (the Act). 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.
[PS 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.
According to the policy, ASIC expects a code submitted for approval to satisfy the following key criteria:
- be freestanding and written in plain English;
- incorporate a comprehensive body of rules (not a single issue guideline);
- be enforceable against subscribers;
- be developed in a consultative way with key stakeholders;
- be effectively and independently administered;
- be adequately promoted;
- have monitored and enforced compliance;
- contain appropriate remedies and sanctions; and
- be subject to a mandatory review every three years.
‘Industry codes of conduct are not new to the financial services industry. This policy builds on that experience to create a flexible framework within which codes can develop. In finalising this policy, ASIC has consulted with industry and consumer groups to encourage industry to develop effective codes against clear benchmarks that deliver measurable benefits to consumers,’ said Mr Greg Tanzer, ASIC’s Executive Director of Consumer Protection.
‘Effective codes can bring about significant consumer benefits and enhance consumer confidence in a particular industry. Codes are most valuable when they address specific industry issues or consumer problems not covered by the law and assist industry to comply with the law. For this reason, we encourage industry to develop new codes or review existing codes against the criteria set out in this policy,’ Greg Tanzer added..
A copy of the Policy Statement can be obtained from ASIC’s Infoline by calling 1300 300 630 or from the ASIC website at www.asic.gov.au/ps.
End of release