Stronger industry codes of practice are needed to improve financial services’ self-regulation following recent failures, Australian Prudential Regulation Authority (APRA) Chairman Wayne Byres says.

“Industry can no longer be in any doubt that it’s not enough to provide after-the-event remediation once a problem is called out,” he told a conference in Sydney last week, in a speech entitled Is Self Regulation Dead? “Customers expect firms to strive harder to avoid bad outcomes in the first place,”

Organisations revising their codes of practice include the Insurance Council of Australia, National Insurance Brokers Association and the Financial Services Council.

The reviews were on the agenda before the Hayne royal commission, but it recommended further strengthening codes with enforceable provisions.

“By giving industry codes of practice real teeth and forcing firms to embed frameworks that adequately address accountability and misconduct, governments and regulators are seeking to empower the financial services sector to more effectively police itself,” Mr Byres said.

He highlighted consumer credit insurance (CCI) as an example of industry shortcomings in tackling their own problems, but he said it was important that self-regulation can work effectively.

“Formal regulation and enforcement cannot be the only answer to the issues of community concern,” he said.

The Australian Securities and Investments Commission (ASIC) in 2011 made 10 recommendations to improve the design and sale of CCI, and then raised further concerns in 2017.

Despite industry commitments for improvement, the latest ASIC report shows policyholders are still receiving only 19 cents back in claims for every dollar of premium, little changed from 18 cents in 2011 when ASIC blew the whistle.

“No one would regard that one cent difference as progress,” Mr Byres said.