Codes of conduct

ASIC has the power to approve codes of conduct in the financial services sector and administers the ePayments Code.

What is a code of conduct?

A code of conduct (or a code of practice) is a set of enforceable rules setting out an industry’s commitments to deliver a certain standard of practice.

Codes of conduct are intended to raise industry standards and complement legislative requirements, and aim to encourage consumer confidence in a particular industry.

A number of codes of conduct have been developed in the financial services sector. An industry association is not required to seek ASIC approval of its code, but may choose to do so.

ASIC’s role in codes of conduct - generally

ASIC has the power to approve codes in the financial services sector: see section 1101A Corporations Act 2001 (Corporations Act). Regulatory Guide 183 Approval of financial services sector codes of conduct (RG 183), sets out how we will approve a code of conduct.

An approved code of conduct should meet a number of criteria, including:

  • a comprehensive body of rules developed in consultation with stakeholders
  • enforceability against subscribers to the code
  • adequate provisions for dispute resolution, remedies and sanctions
  • effective and independent administration – including compliance monitoring.

It is not mandatory for codes of conduct to be approved by ASIC.

ASIC’s role in codes of conduct – opt-in requirement

Under s962K of the Corporations Act, introduced as part of the FoFA reforms, an AFS licensee or representative who receives fees under an ongoing fee arrangement for the provision of personal financial product advice must give the client a written renewal notice every two years, which requires the retail client to opt-in to renew that fee arrangement. This is known as the ‘opt-in requirement’.

ASIC has the power under s962CA of the Corporations Act to exempt a person or class of persons from complying with the opt-in requirement if we are satisfied that the person is, or persons of that class are, bound by an ASIC-approved code of conduct that obviates the need for persons bound by the code to be bound by the opt-in requirement. We consider that a code will obviate the need for the opt-in requirement if it achieves substantially the same policy outcomes that s962K is intended to achieve - that is, to ‘protect disengaged clients from paying ongoing financial advice fees where they are receiving little or no service’.

With effect from 1 July 2017, ASIC has:

  • approved the FPA Professional Ongoing Fees Code dated 28 September 2016 (the FPA Code); and
  • exempted members of the Financial Planning Association of Australia (FPA) who are subscribed to the FPA Code from compliance with the opt-in requirement.

The ePayments Code

Users of electronic payment facilities in Australia are protected by the ePayments Code. This code regulates consumer electronic payments, including ATM, EFTPOS and credit card transactions, online payments, internet and mobile banking, and BPAY.

ASIC is responsible for the administration of the ePayments Code. We monitor subscribers’ compliance with the code and review the code regularly.

Almost all banks, credit unions and building societies in Australia are subscribers to the ePayments Code. Other providers of consumer electronic payment facilities such as PayPal have also subscribed to the code.

Codes of conduct developed by industry

ASIC does not approve all codes of conduct developed by the financial services industry under RG 183, and, even where we have approved them, we do not oversee their administration. However, there are a number of formal codes developed by the financial services industry that have not been approved by ASIC that may be useful to consumers. Often, these are referred to as a 'code of practice', which has the same meaning as a code of conduct.

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Last updated: 07/03/2017 10:34