Insurance industry put on notice as ACIL raises mandatory Code powers with Minister Mulino

The Australian Consumers Insurance Lobby (ACIL) has warned the insurance industry that it needs to get its house in order, following a constructive meeting with Assistant Treasurer and Minister for Financial Services Dr Daniel Mulino MP about the future of insurance industry Codes of Practice.

ACIL Chairperson Tyrone Shandiman had a productive meeting with Minister Mulino to discuss concerns about the General Insurance Code of Practice, the independence of industry-led Code reviews and whether self-regulation is continuing to deliver appropriate outcomes for consumers.

ACIL discussed section 1101AE of the Corporations Act 2001, an existing power that allows the Commonwealth, through regulations, to prescribe a financial services code and declare it mandatory. The provision was introduced through the Financial Sector Reform legislation following the Hayne Royal Commission.

ACIL says industry now has an opportunity to demonstrate that self-regulation can deliver meaningful consumer protection and professional standards.

“Our message to the ICA and NIBA is simple: get your Codes right.”

“Industry should have an important role in developing professional standards, but self-regulation cannot simply mean industry deciding which recommendations it is prepared to accept.”

“The opportunity still exists for industry to demonstrate that self-regulation can work. But the industry should not assume that it has an indefinite right to write, control and determine the standards by which its own conduct is judged.”

The ICA's redrafted General Insurance Code was released for consultation in June 2026 and is intended to be submitted to ASIC for approval. NIBA released its draft 2027 Insurance Brokers Code in July following an independent review and consultation process.

The independent Insurance Brokers Code Compliance Committee has itself said NIBA's draft “falls short in several important areas” and does not fully implement the Independent Review's recommendations, highlighting remuneration disclosure to individual and small-business clients as its most significant concern.

Mr Shandiman said the industries should not assume that voluntary self-regulation is their only possible future.

“Parliament has already provided Government with a backstop.”

“Section 1101AE allows regulations to prescribe a Code of Conduct and declare it mandatory. The legislation is already there.”

“ACIL's preference is for industry to get this right itself through genuinely independent processes and stronger consumer protections. But self-regulation has to earn public confidence.”

“Industry should contribute to its Code. It should not control it.”

ACIL said it would continue engaging with Government as the two Code processes progress.

Corporations Act 2001 – Section 1101AE

Mandatory codes of conduct

1101AE Mandatory codes of conduct

(1) The regulations may prescribe a code of conduct for the purposes of this Division and declare it to be a mandatory code of conduct.

(2) Regulations declaring a code of conduct a mandatory code of conduct may also:

(a) confer functions and powers on a person or body for the purposes of:

(i) monitoring compliance with the code of conduct; and

(ii) dealing with disputes or complaints arising under, or in relation to, the code of conduct; and

(iii) dealing with other associated administrative matters; or

(b) provide for and in relation to:

(i) the keeping of records by persons bound by the code of conduct; and

(ii) reporting obligations of such persons.

(3) If regulations prescribe a code of conduct, the code of conduct may prescribe pecuniary penalties not exceeding 1,000 penalty units for civil penalty provisions of the code of conduct.

(4) To avoid doubt, subsections 1317G(3) and (4) do not apply in relation to the contravention of a civil penalty provision of a mandatory code of conduct.

Financial Sector Reform (Hayne Royal Commission Response) Bill 2020

Explanatory Memorandum – Mandatory codes of conduct

1.120 The Government may impose a mandatory code of conduct through regulations where a mandatory code is the most appropriate tool. This may be more appropriate to address poor consumer outcomes in an industry sector when, for example, an industry has insufficient capacity or cohesion to develop a voluntary code of conduct; efforts between ASIC and industry to develop a voluntary code of conduct have not been successful; industry participants have not put forward a proposed code in a timely manner; and/or where the industry has engaged in egregious conduct and it is in the public interest for a mandated code of conduct.

1.121 A mandatory code of conduct would be prepared by Treasury in consultation with ASIC, industry and consumer groups, and would be subject to a public consultation process. Regulations are made by the Governor-General and are subject to disallowance.

1.123 The ability to confer powers and functions on a body or person is important to the operation of the mandatory code of conduct as the industry sector that the mandatory code of conduct applies to may not have the appropriate structures in place to monitor compliance with the code, or deal with disputes arising between consumers and industry participants who are subject to the code.

These are from the Explanatory Memorandum to the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, which implemented Recommendation 1.15 of the Financial Services Royal Commission.