What Is an Industry Code of Conduct? (2020 Update)
Read this article to learn about how industry codes of conduct operate, and their benefits to both industries and consumers.
If you work in an industry, you’ve probably heard of an industry code of conduct. These are fundamentally enforceable rules and measures that above all, aim to regulate industry conduct. This applies to its workers and their relationship with consumers. The role of an industry code is to improve industry standards and support legislative requirements. Further, industry codes of conduct can be mandatory or voluntary, apply to a single business or an entire industry.
Mandatory and Voluntary Codes
These kinds of codes mean businesses within this industry must comply. Current mandatory industry codes in operation include the Franchising Code, Horticulture Code, Oil code, Unit Pricing Code, Dairy Code and Wheat Port Code. Likewise, the Australian Competition and Consumer Commission (ACCC) regulates and enforces these codes. Further, the Competition and Consumer Act 2010 (Cth) regulates the ACCC.
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. Similarly, an effective voluntary code can lead to reduced regulation and increased protection for consumers and workers.
Codes are developed in consultation with stakeholders such as government bodies, the ACCC, industry groups, associations and the public. Likewise, the Code of Banking Practice is an example of this consultative process. This code engaged with small businesses, consumers and industry groups and was guided by the Australian Banker’s Association.
If you’re unsure whether your industry is bound by a voluntary code, you can also find out on the ACCC’s public register.
What are the benefits of an industry code of conduct?
An industry code of conduct 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 do they include?
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. Similarly, the purpose and objectives must be clear and communicated to stakeholders, industry participants and consumers.
An industry code of conduct 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.
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.
An industry ombudsman, committee or mediator can undertake a review if a complaint cannot be resolved. For example, the Telecommunications Industry Ombudsman (TIO) can investigate complaints under the TCP code.
All industry codes are subject to an independent periodic review for the reason that all procedures and industry practices remain relevant to both the industry and it’s consumers.
Zac is a consultant at Lawpath, Australia’s largest and fastest growing online legal platform. Since joining Lawpath, Zac has assisted 1000s of startups and small business’s with their legal needs.