Why are there so many Codes of Conduct?

Codes are part of a series of regulatory reforms designed to improve compliance as well as reduce costs to Government and business. At the same time regulators are being asked to “do more with less”.

Codes of Conduct were created as a compromise between Governments’ reluctance to impose detailed legislative regulation on industries that were changing and not having any regulation at all. The compromise offered by a range of industries from financial services through to franchising was self-regulation.

Governments now consider industry self-regulation as a prime regulatory option. In fact, by 1997 a staggering total of 30,000 codes of practice were identified in a  review.

Whilst it is possible for consumers and regulators such as the ACCC to take individual action against companies to enforce the law, court actions always take time and are costly. Even when the law is clear, its actual application depends on the facts. Lawmakers are reluctant to prescribe detailed procedures and industry always resists such prescription.

So the view of the Government and regulators was that if an industry could develop a code which met certain criteria, they would be satisfied.

Full article (pdf)

Links:     ACCC Guidelines on voluntary codes
            ASIC policy on approving codes of conduct