What is an industry code of practice?

An industry code of practice is a set of enforceable rules and measures put in place to regulate industry conduct, its workers and their relationship with consumers. The role of an industry code is to improve industry standards and support legislative requirements, by providing an industry with a flexible and low cost form of regulation. Codes of practice can be mandatory or voluntary, apply to a single business or an entire industry.

Mandatory and Voluntary Codes

Mandatory

An industry regulated by a mandatory code will be bound by the code. Current mandatory industry codes in operation include the Franchising Code, Horticulture Code, Oilcode, Unit Pricing Code and Wheat Port Code. These codes are regulated and enforced by the Australian Consumer and Competition Commission, with action and relief available under the Competition and Consumer Act 2010 (Cth).

Voluntary

Voluntary codes are far more flexible and popular than mandatory codes, with only members of an industry or profession that have agreed to a code bound by it. An effective voluntary code can result in reduced regulation and increased protection for consumers and workers.

Codes are developed in consultation with stakeholders such as government bodies, industry groups, associations and the public. The Code of Banking Practice is an example of this consultative process, a code that engaged with small businesses, consumers and industry groups and guided by the Australian Banker’s Association. A public register of companies bound by voluntary codes is held by the ACCC.

What are the benefits of an industry code of practice?

An industry code of practice provides a range of benefits to both industry and consumers such as:

  • The creation and enforcement of appropriate industry practices formulated by industry experts.
  • The flexibility of an industry code allows businesses to respond to recurring market issues and adapt to changing consumer needs.
  • A business-friendly alternative to legislation that can result in reduced costs for industry and government.
  • Providing safeguards and protection for consumers.

What is included in an industry code of practice?

The purpose of an industry code is to ensure industry compliance with an agreed upon set of objectives that benefit workers, employers and consumers. These objectives usually concern the promotion of best industry practice, improving safety standards and enhancing consumer confidence. The purpose and objectives must be clear and communicated to stakeholders, industry participants and consumers in order to understand their rights and obligations under the code.

An industry code of practice will set out a framework for compliance through provisions such as:

  • Specific measures for compliance, relevant guidelines, standards and practices;
  • Risk management strategies;
  • Complaint handling schemes and sanctions for non-compliance; and
  • An outlined process for periodic review of the code.

How are these objectives achieved?

All industry codes contain an internal dispute resolution scheme and provisions to establish a committee that monitors and enforces industry compliance. These schemes provide an industry with measures to efficiently and objectively respond to customer issues, as well as guidelines for imposing sanctions for non-compliance with the code. They may, like the Telecommunications Consumer Protections Code (TCP Code) outline that all customer complaint processes must be easily accessible to the consumer, offer timely responses and be free of charge.

If a complaint cannot be resolved, an independent body such as an industry ombudsman, a committee or a mediator may review it. For example, any unresolved complaints under the TCP code can be received and investigated by the Telecommunications Industry Ombudsman (TIO).

All industry codes are subject to an independent periodic review to ensure that all procedures and industry practices remain relevant to industry and consumers.

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Zachary Swan

Zachary is a marketing co-ordinator at LawPath assisting the content team. With a keen interest in digital media and IP law, he has completed a Bachelor of Law and Communications at the University of Wollongong.