Yesterday, the coalition government released details of action being taken in regard to yet another recommendation from the royal commission final report.
The statement outlined the efforts being made towards creating enforceable codes of conduct in financial services, as well as in equipping regulators and consumers with more power to hold the institutions accountable for misconduct.
The government has agreed to implement recommendation 1.15, which will enable ASIC to approve codes for a wider range of entities and will treat a breach of code as a breach of the law.
The changes are in direct response to Commissioner Hayne stating, “There must be adequate means to identify, correct and prevent systemic failures in applying the code… in order to do that, some provisions of the codes should be picked up and applied as law.”
Additionally, mandatory codes can be imposed by the government should the financial services industry fail to propose updated enforceable code provisions “in a timely manner.”
According to a statement from the Australian Banking Association (ABA), the move “is welcomed by Australia’s banks, who look forward to working with regulators and the treasury to identify what more can be done to further enforce its new Banking Code of Practice.”
The Banking Code of Practice, slated to take effect on 1 July, will introduce new measures intended to make banking products more customer focused, such as through making them easier to understand for the average consumer.
The code is currently enforceable through the courts and Australian Financial Complaints Authority. However, in light of recent events, it has been announced that the code will be amended further.
“While the new code is already enforceable as relevant clauses form part of a customer’s contract, the industry will work with the government to identify what more can be done regarding enforceability following the recommendation of the royal commission,” said CEO of ABA, Anna Bligh.
