Drafting an effective code of conduct

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Before drafting the code 

Codes of conduct are generally created by industry groups. Before drafting a code:

  • read this information 
  • identify and consult with relevant stakeholder groups, such as industry segments, consumer affairs agencies including Consumer Affairs Victoria and the Australian Competition and Consumer Commission (ACCC), relevant users, consumer and public interest groups. This will help to identify and understand the problems the code should address 
  • clearly define the code’s objectives, then establish: 
    • the issues the code should address 
    • the benefits the code will provide to stakeholders 
    • the rules necessary to achieve the objectives 
    • the likely costs of administering the code 
    • how this cost will be funded 
    • the resources available to develop an effective code
  • larger industry associations may wish to establish a committee to develop the code.

The next step is to draft the code and road-test it with users. It may be necessary to redraft the code more than once to address stakeholder issues.

A high level of stakeholder involvement will encourage a high level of code ownership and coverage. It will also ensure the industry code is more likely to achieve its objectives.

Drafting the code 

When drafting an industry code, consider its structure.

The final content will depend on the industry and the problem(s) that the code is designed to address. 

The critical steps are to:

  • identify the problems the code is seeking to address 
  • ensure the code’s objectives and purpose reflect specific stakeholder and business concerns 
  • detail the rules that address common complaints and concerns about industry practices.

Other steps may include:

  • establish a committee to administer the code (a code administration committee) and describe its functions in the code 
  • provide for a complaints handling scheme in keeping with the Australian Complaints Handling Standard AS4269 
  • incorporate commercially significant sanctions for breaches of the code 
  • provide for an independent review mechanism when a complainant is dissatisfied with an outcome 
  • incorporate mechanisms to ensure consumer and industry awareness 
  • include provisions to assist signatories in meeting their regulatory obligations 
  • provide for relevant data collection 
  • specify a regular review process 
  • avoid anti-competitive implications in the code. If the proposed code has anti-competitive implications, seek advice from the Australian Competition and Consumer Commission (ACCC) 
  • ensure the framework and language is clear to all stakeholders 
  • incorporate performance indicators for the code.

Code purpose

The code must state its objectives and define key terms.

The objectives must clearly explain why the code was established and what it intends to achieve. This will assist users and help to assess the success or failure of the code. 

Definitions are clearly written to explain technical and legal terms. While the code must be consistent with the law, stakeholders should be able to easily understand their rights and obligations. Using plain English will prevent ambiguity.

Code rules

This part identifies the rules that must be followed to achieve the objectives. When developing the rules, keep in mind the identified issues and problems. 

Code rules provide signatories with standards set by the industry and may establish best practice. 

Code rules also inform interested parties about their rights and obligations under the code; the quality and service they can expect; and how to lodge a complaint when they are dissatisfied with the product or service they received.

Hypothetical example:

A Victorian Oyster Code of Conduct for Victorian oyster farmers and sellers designed to address the authenticity of Victorian oysters may develop rules addressing:

  • the accuracy of record keeping by all stakeholders 
  • a means for consumers to check authenticity 
  • detailed customer receipts 
  • correction of errors, outlining steps to be taken by a retailer when an error is identified 
  • full refund policy 
  • an audit trail, so that an error can be traced from its origin to when and how it was or was not corrected. 

Effective complaint handling

An effective code should have a complaint handling process that incorporates:

  • a definition of complaint that includes any expression of dissatisfaction with a product or service offered or provided 
  • a procedure whereby complaints are considered initially by signatories to the code 
  • lodgement of complaints with the code administration committee or an independent decision-maker appointed by the committee in cases where the signatories cannot resolve a complaint 
  • performance criteria for complaint handling. 

The code should also provide for the industry association to conduct an internal review when a complainant or industry member is dissatisfied with an initial attempt to resolve a complaint. When all internal industry efforts fail to resolve a complaint, the industry should sponsor an independent body to review the matter.

This independent review body should:

  • be recruited from outside the industry 
  • hold no preconceived ideas about the industry 
  • have fixed term tenure 
  • be suitably qualified to hear and resolve complaints. 

By recruiting from outside the industry to review complaints, justice is seen to be done. Industry associations exist to benefit members, so may not be seen as independent when reviewing complaints about industry members.

Examples of independent complaints bodies include:

  • an independent referee with conciliation powers 
  • an industry ombudsman with power to make binding decisions 
  • a committee with the power to make determinations, comprising an independent chair, one or more industry members and consumers.

Standards Australia has developed a benchmark standard (AS4269) for effective complaint handling.

Awareness of the code

An effective code should incorporate a strategy that will raise consumers’ awareness of the code and its contents, including its complaints handling provisions. Publishing a list of code signatories may help raise awareness.

In many cases, a code fails to operate effectively because employees or industry members are unaware of the code or fail to follow it in their day-to-day dealings.

The code must contain a provision requiring employees and agents to be instructed in its principles and procedures. This should be an ongoing responsibility (due to staff turnover), overseen by the code administration body.

Meeting regulatory obligations

An effective code may help signatories meet their regulatory obligations. For example, the code may prescribe steps that signatories could take to ensure they comply with relevant legislative requirements.

However, codes should not replace any regulatory obligations. A regulatory obligation takes precedence if there is any inconsistency with a code.