• Does regular board refreshment deliver increased value?  A global study by ISS has found companies with a balanced board composition relative to director tenure, tend to show better financial results and have lower risk profiles than their peers.
• United States | How much oversight of business decisions is needed for a director to discharge their duties? A MoviePass Director has reportedly stepped down from the board citing governance concerns, including insufficient insight into business decisions.

• Progress towards gender balance?  According to the second annual ASX200 Senior Executive Census the number of ASX 200 companies with zero female representation has decreased significantly (from 21% in 2017 to 12% in 2018) since last year.
• In Brief | 'Our results have proved the doubters wrong' voluntary targets are effective writes AICD Chair Elizabeth Proust: The Australian Institute of Company Directors June-August 2018 Quarterly Report has found women account for 28.5% of ASX 200 board positions, indicating that the 30% representation target for the end of the year is in sight. 

• In Brief | Japanese Stewardship Code update: The Financial Services Agency has announced that 233 institutional investors have now become signatories to the Principles for Responsible Institutional Investors as of August 31, 2018.

• In Brief | No evidence that shareholder power is excessive?  Harvard Law School Professor Jesse M Fried writes that there is no evidence that shareholder power in the US is excessive or a 'critical problem' and that consequently efforts to address it — both President Trump's proposal to shift away from quarterly reporting and Senator Warren's Accountable Capitalism Act — are 'both wrong'.  He suggests that the 'consensus' on both sides on the need to act is concerning because it 'creates a real risk that one or both of their policy proposals could be adopted, either in this administration or the next one'.

• Improved technology means that virtual and hybrid AGMs can actually deliver shareholder benefits, so time to focus on best practice and embrace the change? 
• In Brief | Potential to address structural issues inhibiting shareholder engagement?  Tillburg University academics Christoph Van der Elst and Anne Lafarre argue that use of private blockchain technology could increase shareholder engagement and address many of the limitations of the current AGM structure.   

Climate Risk Disclosure

• More aware of the need to disclose climate risk but slow to provide detail on strategies to meet Paris climate goals: Many Australian companies operating in sectors identified by the TCFD as most exposed to climate risk are making 'painfully slow' progress towards disclosure according to Market Forces analysis.  
• Sound commercial reasons to consider adopting the TCFD recommendations? Writing in Harvard Law School Forum CCLI argues that failing to adopt the TCFD recommendations is actually more risky for companies than the alternative.  

• In Brief | The ASX has announced that it will delay the go-live date for its planned distributed ledger technology (DLT) based CHESS replacement system until early 2021, in response to industry feedback over the original implementation timeframe.  

Australian Prudential Regulation Authority (APRA)

• Top Story | Embrace BEAR and fix remuneration: APRA Chair Wayne Byres has identified BEAR implementation as an area of focus and  has called on banks to make improvements in the design and implementation of executive remuneration to rebuild trust.  

Australian Securities and Investments Commission (ASIC)

• Top Story | ASIC Commissioner has outlined three new supervisory initiatives: embedding ASIC staff, enhanced supervision and enforcement focus on the superannuation sector and the corporate governance taskforce. 
• ASIC Corporate Plan 2018-2022: 2018-2019 focus areas 
• In Brief | ASIC has announced that a former director has been convicted in the Brisbane Magistrates' Court and fined $900 for failure to comply with a Notice issued under the ASIC Act (to attend a formal examination and provide ASIC with assistance in an investigation).  
• In Brief | Treasurer Josh Frydenberg has announced that Ms Danielle Press and Mr Sean Hughes have been appointed full-time Members of the Australian Securities and Investments Commission (ASIC) for a 5 year period.  Mr Frydenberg said that the new appointments 'will boost the experience and capability of the Commission in relation to financial markets and regulation, including superannuation, and will contribute to the leadership necessary to support the Commission’s new strategic direction which will enhance its ability to detect and address misconduct in financial services and protect consumers'.

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission)

• Responses to Round 5 hearings into Superannuation have been released by the Financial Services Royal Commission: brief overview of APRA submission.

Superannuation

• Top Story | First ASIC FFNS enforcement action? ASIC has announced that it has commenced proceedings in the Federal Court against two NAB entities 
• ASIC Report into insurance cover in superannuation: poor complaints handling and inappropriate defaults highlighted as among the issues of concern for the regulator.
• The arguments for limiting the 'best in show' funds to ten 'appear limited', and doing so may limit competition and deliver poorer returns to members according to ASFA: ASFA has released a discussion paper, critiquing the assumptions underpinning the Productivity Commission's draft report, and in particular the 'best in show' model.  

Banking

• Responsible lending | ASIC has announced that Westpac has admitted to breaching responsible lending obligations when providing home loans and has agreed to pay a $35 million civil penalty.  
• Progress update on credit card reform | ASIC has prescribed a three year period for credit card responsible lending assessments following recent consultation. 
• In Brief | Time to break up the banks?  The AFR reports that former ACCC Chair Allan Fels has said that Financial Services Royal Commissioner Kenneth Hayne should consider breaking up or 'ring fencing' the banks' guaranteed deposit taking and lending business from their financial advisory businesses and investment banking businesses.  'You can't just rely on the banks behaving better, you can't just rely on ASIC doing the job.  It'll need to go further' he is quoted as saying. 
• In Brief | The Australian Banking Association has issued a media release calling on all lenders, whether or not they are ABA members, to adopt the new Banking Code of Practice to raise standards. 'While we fully expect further changes to be made to banking following the final report of the Royal Commission, it’s important that all lenders, such as credit unions, building societies and others adopt the same rigorous standards to ensure there is consistency across the industry' ABA CEO Anna Bligh said.

Insurance

• In Brief | APRA has released intermediated general insurance statistics for the six months to June 2018: APRA highlights that as at 30 June 2018, there were 1,686 intermediaries licensed to conduct general insurance business. Of these; 48% placed business directly with underwriters the six months to June, 2% placed all their business directly through other Australian intermediaries, and 51% did not place any general insurance business in the period. 

Other Developments

• The Treasurer has confirmed Treasury portfolio arrangements following the recent change in the Liberal party leadership and consequent Ministry reshuffle.  

• The AFR reports that the Labor party has called for the ACCC to investigate the big four accounting firms over allegations of cartel-like behaviour.  

Climate

• In Brief | The significant financial benefits of transitioning to a low-carbon economy are vastly underestimated?  A new report from the Global Commission on Economy and Climate has found 'bold action' on climate change within the next 2-3 years could yield a direct economic gain of US$26 trillion through to 2030 as compared with business-as-usual.  Whereas failure to transition to a new low-carbon economy will trigger various costs including, significant financial costs arising from extreme weather events, a surge in climate migrants and increased risk of adverse health outcomes. 
• In Brief | Australia is not yet on track to meet its emissions reduction targets under the Paris Agreement but the window hasn't closed according to research by ClimateWorks Australia.  According to the report, current and proposed policies would see emissions at 11% below 2005 levels in 2030, which is less than half the progress needed to meet the government’s current 2030 target of 26-28% and one third of the abatement needed to reach the net zero pathway. 

Whistleblowing

• MPs have reportedly called for Assistant Treasurer Stuart Robert to take action on proposed whistleblowing protections currently 'on hold' due to the recent upheaval in parliament.
• In Brief | SEC has announced that it has awarded $54m to two whistleblowers ($39m to one whistleblower and $15m to another) whose 'critical information and continued assistance helped the agency bring an important enforcement action'.  The award is the second largest in the history of SEC's whistleblower program SEC writes.

AML/CTF 

• Top Story | AML and international sanctions – €1.1 billion lesson
• In Brief | ING Groep has reportedly agreed to pay €775 million ($1.3 billion) to settle money-laundering allegations brought by Dutch public prosecutors.  Reportedly, ING failed to properly vet the beneficial owners of client accounts and did not effectively monitor accounts for unusual transactions, thereby enabling customers to use the accounts for criminal activities from 2010-2016 'virtually undisturbed'.  According to media reports, the penalty is the largest ever imposed on a company by the Dutch public prosecution service.