Industry codes of practice are an efficient and flexible way to develop good practice, a leading expert told the Australian Securities and Investments Commission (ASIC) summer school last week.

Consultant Dick Viney, who oversees the General Insurance Code of Practice through the Insurance Ombudsman Service, says the most effective codes provide genuine engagement with industry stakeholders.

In his keynote address on “Industry standards and principles: Are they worth the paper they are written on,” he said codes of practice also need to be created by an independent body or person and be widely publicised throughout the industry.

Other key features of a useful and successful code include clear objective statements, appropriate sanctions for breaches and a system for dispute resolution. The majority of relevant businesses should also subscribe.

Mr Viney says it’s not necessary for a code to be approved by ASIC. He told Sunrise Exchange News that the “modern view” of industry codes is for them to be voluntary.

“The insurance industry’s code used to be mandatory for personal lines,” he said. “However, it makes sense to have voluntary codes because people will sometimes sign up out of duty rather than being sincere about it.”

He also says a very important part of a successful code is the monitoring system in place and the necessity of sanctions if breaches occur.

“If a member is involved in systemic breaches of the code it’ll be picked up by groups like the Banking Ombudsman and the Insurance Ombudsman Service.”