Treasurer Josh Frydenberg has issued a consultation paper on the controversial Hayne royal commission recommendation to make parts of industry codes of conduct enforceable by law.

The Government has agreed to act on all code-related proposals, which include giving the Australian Securities and Investments Commission (ASIC) greater involvement in regulating them.

“Industry codes are vitally important in promoting best practice and raising standards,” Mr Frydenberg said. “Through these changes, it will also be made clear that certain promises made in codes are enforceable against financial services firms by consumers.”

The Treasury paper asks 15 questions and welcomes comment more generally on the proposed changes.

Key issues include the level of enforcement power ASIC should have, what criteria it should consider when approving voluntary codes and whether subscribing to codes should be a condition of licences.

The paper asks what level of supervision and compliance monitoring there should be and when codes should attract a civil penalty, and it addresses matters involving external dispute resolution.

Commissioner Kenneth Hayne has urged the Insurance Council of Australia (ICA), Financial Services Council and ASIC to “take all necessary steps” by June 30 2021 to have enforceable provisions designated.

ICA told insuranceNEWS.com.au it welcomes the release of today's paper.

"The recommendations of the royal commission raised important questions which go to the very nature of self-regulation," spokesman Campbell Fuller said.

"The Insurance Council will work through the consultation paper carefully with its members." 

The move to a more legalistic approach was highlighted at the ICA Annual Forum last month.

ICA CEO Rob Whelan said companies’ cultures have changed for the better since the adoption of a voluntary code and taking a “blackletter law” approach “changes the whole picture”.

Former long-serving compliance committee chairman Michael Gill, who has been involved with industry codes since the 1970s, told the forum confusing voluntary codes with the law is “very, very dangerous”.

Submissions are due by April 12. For more details, click here.