Does An Industry Code of Practice Apply To Your Business?

As a business owner, if your business’ industry has an industry code of practice, it is crucial you know it and abide by it. 

Industry codes of practice exist across many sectors. It is expected that your business complies with these codes and guidelines. 

Read on to learn more, as we cover some of the larger industry codes of practice. 

What Is An Industry Code Of Practice?

An industry code of practice (also known as an industry code or guideline) sets out standards for how you are expected to run your business. 

The purpose of an industry code or guideline is to protect dealings between you and your customers or clients. For example, industry codes aim to protect consumers from misleading conduct or unsafe practices by clearly detailing what businesses can and can’t do when carrying out their activities. 

Industry codes are formulated by key stakeholders such as government bodies, industry groups, and the public. Industry codes have been developed through the guidance and opinion of the industry itself to determine what is considered the best code of practice for that particular sector. 

Are Industry Codes Enforced?

Some industry codes are mandatory, while others are voluntary. 

If an industry code is mandatory, this means that every business within that industry must comply with that code. If a business does not comply with a mandatory industry code, regulatory enforcement will follow. 

A few examples of mandatory codes include the: 

• Financial Advisers Code
• Real Estate Agents Code of Conduct
• Building Code
• Electricity Industry Code
• Dairy Industry Code
• Telecommunications Code

In New Zealand, the Commerce Commission is the regulator and enforcer of many of the mandatory industry codes. The Commerce Commission’s role is to enforce mandatory industry codes and ensure their purpose is being upheld. 

The Commerce Commission has authority to issue infringement notices to businesses who do not comply with mandatory industry codes. A business can be fined for breaching an industry code. 

Other sectors have voluntary industry codes. Examples of industries that have voluntary codes include the: 

• Advertising Standards Authority Code
• Voluntary Code for Mobile Traders.

These codes are flexible, allowing businesses that wish to be a part of the code to sign up. Only businesses that have voluntarily signed up to the code will be bound by it. 

Examples Of Industry Codes

Let’s break down some popular industry codes of practice and consider what they may mean for you and your business. 

1. Financial Advisers Code of Conduct

Industry: Financial Advising

Key Elements: 

• The current version of the code was introduced on 15 March 2019. 
• Financial advisers must give information to clients before providing services. 
• Advisers must ensure that their advice is suitable for the client and based on the client’s circumstances.

This Code is mandatory. 

As such, if your business is associated with financial advising, this code will apply to you. 

2. Real Estate Agents Code of Conduct 

Industry: Real Estate 

Key Elements: 

• If you are a real estate agent, you must comply with the Code, which sets out professional standards for agents. 
• The purpose of the Code is to ensure that agents act fairly and in the best interests of their clients while also considering the interests of all parties involved in a transaction. 

This Code is mandatory. 

The Code applies to all licensed real estate agents in New Zealand. 

3. Building Code

Industry: Building and Construction

Key Elements: 

• This Code sets out performance standards that all building work must meet, even if it doesn’t require a building consent.
• It covers aspects such as structural stability, fire safety, access, moisture control, durability, services and facilities, and energy efficiency.

This Code is mandatory. 

If your business is involved in the building and construction industry, this code will apply to you. 

Not Mentioned Above? 

Above are only some examples of industry codes that may be applicable to your business. Clearly, there can be a lot of information surrounding industry codes, practices, and mandatory compliances. 

For further information on business industry codes or the industry code that applies to your business, check out the Commerce Commission here. 

The Takeaway…?

Understanding which industry codes apply to you and your business is imperative to ensuring you are in compliance. 

As set out above, failing to comply with industry codes can be detrimental to your business and its success. 

Need To Get In Touch? 

We’re here to help with your business legals. Reach out to our team for a free, no-obligations chat at [email protected] or 0800 002 184. 

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