Discussion Paper - Guidelines for Code of Practice - summary

August 2000

Guidelines for Developing a Code of Practice

Consumers are exposed on a daily basis to issues of fair trading, product safety, product quality, service performance, and disputes resolution. To promote fair practices in these areas, business behaviour is often regulated. Regulation is the process of making rules which govern behaviour. Regulation can mean one of, or a combination of, the following measures:

• formal government regulation to deal with serious, systemic, or chronic problems
• encouragement of self-regulation, including codes of practice, to deal with problems within a specific market, or with particular business activities
• education and other operational strategies to enhance consumer and trader understanding of acceptable trading standards
• a 'hands off' approach governed by the belief that the interaction between consumers and businesses will in itself ensure that problems will be reduced.

In this guideline we look at how to develop a code of practice which is properly conceived and properly drafted. The guideline refers to the need to consider whether a code of practice is the appropriate way to deal with problems. The decision whether or not to go with a code of practice will depend on the problem and the outcome that is being sought.

Codes of practice are often considered when:

• government regulation is unlikely to occur or is inappropriate, for example where only a segment of the market is affected
• overarching legislation exists and the objective is to assist or promote compliance within a particular industry
• there is widespread acknowledgment of the need for, and commitment to, the development of controls to improve trading standards within a particular industry
• the objective is to provide customer focused benefits beyond the minimum standards provided by the law.

A code of practice can advance consumer confidence in products and individual companies, and also promote good business practices. However, it does not necessarily stand alone. Good codes build on general legal requirements and may be supported by information and education activities for both consumers and businesses. Good codes accurately identify real problems, and provide solutions which are practical and workable in the industry and for consumers. If properly conceived and drafted, codes are as much a positive tool for industry as a safeguard for consumers.

Guidelines Paper - full text

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