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    Governance News 14 November 2019

    60 minute read  13.11.2019 Mark Standen, Siobhan Doherty, Kate Hilder

    Governance News provides a weekly wrap up of key governance, regulatory and risk developments in Australia and overseas. This week's issue includes coverage of APRA Chair Wayne Byres' update on proposed remuneration changes and expert insights into the practical implications of Australia's first shareholder class action decision (Myer decision).

     

    Full coverage of this weeks content is now available. Past issues are available

    read this issue
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    https://www.minterellison.com/articles/governance-news-14-november-2019

    Our most recent top stories

    Diversity Navigation Show below Hide below

    • United States | 2019 US Spencer Stuart Board Index released: S&P 500 boards are (very) slowly becoming more diverse 
    • In Brief | The Fourth Hampton-Alexander Review has been released: Unless the appointment rate of women is nearer 50% in the coming year ie half of all available roles going to women and half going to men, the FTSE 100 and FTSE 250 will not achieve the 33% target by the end of 2020
    • In Brief | Time to address the Asian-American leadership gap?  McKinsey Chief Diversity and Inclusion Officer Lareina Yee and two of her colleagues wrote a piece about Asian under-representation in business, and more particularly in leadership roles.  While workers of Asian descent make up 13% of the US professional workforce, they account for only 7% of business leaders, and only 3% of Fortune 500 CEOs 

    Remuneration Navigation Show below Hide below

    • Top Story | Not wedded to the 50% cap on financial metrics?  APRA Chair Wayne Byres has said that the regulator is considering other options
    • United Kingdom | The IA has written to Chairs of Remuneration Committees of FTSE 350 companies calling for clearer links between pay and performance
    • In Brief | 'You can't fix what you can't see': The SMH reports that CEOS for Gender Equity WA has called for West Australian CEOs to undertake pay gap audits and then take steps, including reviewing executive hiring practices and making 'diversity adjustments' to remuneration where necessary to address the issues identified

    Meetings and proxy advisers Navigation Show below Hide below

    • BHP AGM result: ACCR sponsored ESG resolution failed to be carried, but did secure 29.58% support

    Disclosure and reporting Navigation Show below Hide below

    Regulators Navigation Show below Hide below

    • US SEC enforcement results released: A 'successful year for the division of enforcement' but the Kokesh decision poses an ongoing challenge to SEC's ability to disgorge and return funds to investors injured by long-running frauds

    Corporate social responsibility and sustainability Navigation Show below Hide below

    • Fourth annual Governance Institute annual ethics index released: 90% support for action on climate change among the key findings
    • Westpac will reportedly set targets for its loans book that correspond with the 2016 Paris Agreement to keep global warming below 2 degrees
    • Socially responsible (and also encourages customers to fly Qantas)? 
    • Time to look beyond shareholder activism and instead consider governance reform?

    Financial Services Navigation Show below Hide below

    • APRA's superannuation data transformation project: APRA has launched a project to improve data collection practices 
    • The Economics Legislation Commission has recommended that the Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019 be passed
    • Going after 'general advice' again?  ASIC has commenced Federal Court proceedings against a super trustee, promoter and others 
    • Superannuation funds reportedly asked to provide the total value and returns of their unlisted assets and listed investments ahead of upcoming public hearings
    • Time to act on PC super reform recommendations says Super Consumer Australia 
    • Consumer groups have released a report into the impact of payday loans on consumers and have called for the government to introduce legislation to enact stronger consumer protections '
    • Parliamentary inquiry into the big four banks: Westpac and CBA appeared before the House of Representatives Standing Committee on Economics
    • Australian financial regulators to investigate Facebook's proposed digital currency? 
    • AFCA has identified the resolution of systemic issues as a key focus
    • In Brief | AFCA has released an online tool — AFCA datacube — which enables consumers to see how financial services providers (banks, general insurers, credit providers, superannuation funds and debit collectors/buyers) have previously responded to complaints.  It includes information about the number of complaints received, how long it takes each member firm to resolve complaints and the number of times financial firms did not respond to a complaint.  The tool also allows people to compare financial firms side-by-side.  The Datacube contains AFCA’s data between 1 November 2019 and 30 June 2019 and will be updated every six months
    • In Brief | The FT reports that QSuper and Sunsuper have held early-stage discussions about a possible merger.  The FT cites this as evidence of a trend towards industry consolidation due to regulatory pressure for increased efficiency
    • In Brief | Following consultation, the UK Financial Conduct Authority have loosened final responsible lending rules and guidance with a view to removing barriers to consumers switching to more affordable mortgages.  The changes allow lenders to use a 'more proportionate affordability assessment' for consumers who are up to date with their existing mortgage, do not want to borrow more and want to switch to a more affordable mortgage.  The changes are also aimed at reducing the time and costs of switching
    • In Brief | 86 400 has reportedly become the first Australian digital bank to offer home loans.  Reportedly the application process is entirely digital (no requirement for customers to submit any physical documents), but customers are required to go through a mortgage broker 
    • In Brief | In a speech to the COBA annual conference, APRA Chair Wayne Byres' has described how competition fits within APRA's mandate and outlined recent initiatives the regulator has taken to support competition.  He also suggested that the mutual sector has an opportunity to win market share in the current environment 

    Accounting and audit Navigation Show below Hide below

    • In Brief | The FT reports that FRC chairman Simon Dingemans has called for the breakup of the big four accounting firms on the basis that he considers that the separation of audit and consulting to be 'critical' 
    • In Brief | UK audit reform will be a top priority (following the 12 December General Election)? Writing in Economia Andrea Leadsom MP, secretary of state for business, energy and industrial strategy confirmed her commitment to taking forward audit reform writing, 'As a business secretary who is committed to raising standards across the board, you can be sure I will bring this forward.  I want to see the UK leading the world in the next phase of improvements in corporate governance and audit reform' 
    • In Brief | The WSJ reports that the auditing standards board of the American Institute of Certified Public Accountants is working to modernise standards governing nonfinancial information to include cybersecurity and environmental, social and corporate governance issues

    Risk management Navigation Show below Hide below

    • Top Story | Optimising data insights and governance outcomes through cultural transformation
    • Practice better cyber-hygiene and assume a breach mentality APRA tells industry 
    • Mandatory (and public) culture reviews for the ASX200?  Transparency is a 'remarkable discipline from which you can never escape' The AFR quotes Graeme Samuel as saying  
    • The Australian reports that Attorney General Christian Porter has said the government will consider empowering the Fair Work Ombudsman to pursue banning order applications against directors for failure to ensure employees are paid correctly
    • In Brief | Delaying legislation to implement Director Identification Numbers?  The Federal Labor Party have criticised the government for delaying a vote on the Bill, alleging the delay is due to the 'IT upgrade expenditure' required to implement the bi-partisan measure 
    • In Brief | CEO (involuntary) exits at a fifteen year high? Fortune reports that more S&P 500 CEOs were 'fired' in 2018 than at any point in the last 15 years.  In addition, there was reportedly an uptick in the number of CEOs who left their roles as a result of personal conduct and #MeToo allegations as compared with 2017, with five leaving in 2018 for these reasons as compared with only one in the period 2013-2017

    Other news Navigation Show below Hide below

    • In Brief | Time to embrace a Bretton-Woods mentality?  In a speech to the ANU Australian Studies Institute Treasurer Josh Frydenberg spoke about the 'importance of recapturing the cooperative spirit of Bretton Woods' in order to position Australia to meet global challenges and 'secure our peace and prosperity'.  'The compact at Bretton Woods which was agreed seventy five years ago, provides us with a framework which is based on cooperation and coordination that has underpinned our peace and prosperity.  We need to recapture that moment and the lessons that got us there' he said

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