Banking code of practice 'needs to be law'

A quarter century after they became a fashion to fend off threatened regulation, industry codes of practice will include "enforceable code provisions, which are provisions in respect of which a contravention will constitute a breach of the law," the final report of the Hayne royal commission proposes.

"Industry codes of practice occupy an unusual place in the prescription of generally applicable norms of behaviour," Hayne wrote, in an analysis of the function (but not much of the history) of such codes.

"They are offered as a form of self-regulation by which industry participants set standards on how to comply with, and exceed, various aspects of the law."

Years of tinkering and reviews strand the codes.

"There may now be some doubt about the extent to which obligations contained in industry codes can be relied on and enforced by individuals," Hayne said.

"The doubt arises, in part, because of the broad range of provisions contained in industry codes. Some are expressed as promises, capable of direct application to the relationship between an individual and a financial services entity. Others are not," he said.

Then there is case law to consider.

"In the circumstances, there may be some uncertainty about which provisions of industry codes can be relied on, and enforced. Uncertainty of this kind is highly undesirable," Hayne said.