The government has begun the thorny task of introducing greater enforceability into financial sector industry codes of practice, while retaining their voluntary and self-regulatory character.Treasury has issued a consultation paper, Enforceability of Financial Services Industry Codes, asking for responses to a range of questions, including whether subscribing to approved codes should be a licensing condition and in what circumstances the government should prescribe a mandatory code.It wants ideas on how codes should be monitored, and what should be appropriate enforcement powers and remedies for breaches.The Hayne royal commission identified a number of limitations in the current industry code of practice framework. It said there needed to be clarification of the status of undertakings companies make when they sign up for codes.It said the status of code commitments was not always clear, which in turn means that those promises are not always enforced, whether by code signatories or the regulator. Hayne said there should be greater certainty about the enforceability of key code provisions.Currently, voluntary codes under the Corporations Act represent a form of self-regulation and setting of standards. There are 12 codes in the financial services industry. Enforcement is usually a matter for the industry itself.ASIC has the power to approve codes where it has received an application. ASIC-approved codes may have provisions that are enforceable by consumers as a contract or guarantee. However, subscription to an approved code remains voluntary.Approval is optional and has rarely been sought. Currently, only the Code of Banking Practice and the Financial Planning Association Professional Ongoing Fees Code have been formally approved.The consultation paper says: "Effective self-regulated codes are generally the preferred method of addressing specific problems in an industry."The royal commission recommended that the law should be changed to extend ASIC's power to approve codes to cover all APRA-regulated institutions and Australian Credit Licence holders. Currently ASIC can only approve industry codes of conduct that relate to the activities of Australian Financial Services licensees, authorised representatives of AFS licensees and issuers of financial products.It also recommended that industry codes approved by ASIC may include "enforceable code provisions", which would have the force of law, and that ASIC may take into consideration whether particular provisions of a code have been designated "enforceable code provisions" in determining whether to approve a code.Industry would be required to identify the provisions of its code that govern the terms of the contract between a financial services company and the customer.And it said ASIC should have the power to impose mandatory industry codes.Under current policy, government will only step in to prescribe codes, when they are necessary for supporting the efficient operation of markets or the welfare of consumers and it is appropriate for the matter to be dealt with in the form of a code rather than a more general law.Under Hayne's proposal, once a code is approved the enforceable provisions would be subject to statutory remedies for breach of promise.