Consumer Protection in the Communications Industry: Moving to best practice - Issues Paper (July 2008)

4.1. Need for whole of government approach to consumer policy development

Co-regulation through codes of conduct can often be a very effective form of consumer protection for the reasons cited by the Internet Industry Association above. But it is not appropriate in all circumstances.

Codes of conduct across a range of industry sectors suffer – to differing degrees – from issues relating to credibility, consumer confidence and consumer awareness. No single sector in Australia is succeeding at addressing all of these issues, although there are some individual codes that have strong consumer awareness and support.

In many sectors it may be necessary to reconsider the reliance on codes of conduct as a consumer protection mechanism. In all sectors it is – we believe – time to review the underlying principles which guide the development and implementation of codes.

ASIC has set out some threshold criteria for selecting co-regulation as a viable model in a particular sector. These tests include:

  • A common industry interest;
  • A viable industry association(s) or industry commitment;
  • Wide industry coverage;
  • A competitive market;
  • Clear objectives developed with stakeholders;
  • Promotion and review;
  • Integration into the regulatory framework; and
  • Accountability, compliance and enforcement.[35]

We understand that ASIC regards these as minimum criteria – satisfying them all does not necessarily lead to a conclusion that co-regulation will work. Another factor that might be taken into account is the degree to which an industry is subject to public scrutiny and public pressure – where this is so it is more likely to do a good job in developing a Code. Applying an appropriate set of criteria, there will be some industry sectors where co-regulation should be wound back in favour of simple, direct regulation.

In sectors where co-regulation is likely to be effective, a consistent national approach should be adopted to the development of codes of conduct – the core instrument of co-regulation.

[35] Segal J, Institutional self-regulation: what should be the role of the regulator?, address to the National Institute for Governance, 8 November 2001, pages 6–7, <$file/NIGConf_081101.pdf>.