Governance News 20 November 2019

60 mins 19.11.2019 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 features (among other things) coverage of APRA's supervisory approach to GCRA risk and the release of the ALRC's discussion paper seeking feedback on 23 proposals to reform Australia's Corporate Criminal Liability Regime.

Diversity Navigation Show below Hide below

Waiting until 2052 to reach board gender parity? A Deloitte report has found women are still largely under-represented on corporate boards globally, and that progress towards change continues to be slow

Remuneration Navigation Show below Hide below

An alternative to APRA's proposed pay reforms? The case for looking back to DuPont and General Motors in the 1920s for guidance on executive pay design
'Too prescriptive'? BlackRock has reportedly raised concerns about APRA's proposed remuneration reforms
The Australian Financial Review's annual CEO pay survey released: remuneration for top 50 CEOs increased by 4% on average (as compared to general wage growth at 2.2%)
In Brief | The pay gap persists after 50 years: The latest WGEA data has found men still out-earn women in Australia on average, by 20.8% (or $25,679 per year). Further WGEA found that pay gaps persist across every industry, occupation and manager category. Commenting on the findings, WGEA CEO Libby Lyons said that 'a drop of only 0.5 percentage points is slow progress by anyone’s measure'

Boards and Directors Navigation Show below Hide below

Change of leadership at BHP announced

Meetings and proxy advisers Navigation Show below Hide below

Should Australia consider following the US on proxy engagement? The AICD has reportedly called consideration to be given to changing how proxy recommendations are prepared
Recent AGM results: Ramsay Health, Coles, Wesfarmers

Markets and exchanges Navigation Show below Hide below

In Brief | ASX has released a consultation paper on the first of three tranches of operating rule amendments required to facilitate the implementation of the new system that will replace CHESS in April 2021. The consultation paper seeks feedback on the operation of the draft tranche 1 rule amendments, including any unintended consequences

Regulators Navigation Show below Hide below

Top Story | Scaling up: APRA has outlined its new and more intensive approach to governance, culture, remuneration and accountability risk
APRA Chair John Lonsdale has given an update on APRA's shift towards using transparency as a tool to drive better prudential outcomes
'Fairness and transparency' are the 'alloy across our regulatory priorities' says ASIC Deputy Chair Karen Chester
In Brief | Writing in Governance Directions, ASIC Chair James Shipton provides an overview of the findings in ASIC's Corporate Governance Taskforce report and explains the importance of non-financial risk for organisations and for ASIC. He also suggests a range of questions for boards to consider in their oversight function

Corporate social responsibility and sustainability Navigation Show below Hide below

In Brief | Voting rights for ‘stakeholders’? Reportedly Dutch Finance Minister, Wopke Hoekstra, has said he would like to explore granting voting rights to the stakeholders of a future privatised De Volksbank, among a number of corporate governance options to emphasise the 'social character' of the currently state-owned bank
In Brief | The AFR reports that Sweden's central bank has sold off Australian and Canadian bonds because it considers greenhouse gas emissions in both countries to be too high. The Australian suggests the move may represent the 'thin end of the wedge' given the broader shift towards incorporating ESG concerns (in particular climate risk) into investment decision making

Financial Services Navigation Show below Hide below

Strengthening protections to ensure vulnerable customers are protected: The ABA has released a new guideline on the sale on unsecured debt
'Galvanising' super funds into action (to lift performance or merge)? APRA has released details of how the MySuper heatmaps will work
'Greasing the skids for mergers': Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume's address to the ASFA conference largely focused on the topic of superannuation fund mergers
The principles underpinning responsible lending provisions remain sound and the criticisms surrounding their application are 'misplaced and without foundation': ASIC Commissioner Sean Hughes has given two speeches on responsible lending responding to issues/concerns raised by some commentators
Product intervention power consultation update | ASIC says it is still working through submissions in response to its consultation on using its product intervention power to address 'significant detriment' to retail clients from trading over-the-counter (OTC) binary options and contracts for difference (CFDs)
Refunds to around 30,000 customers are expected to exceed $12 million by the end of 2019: ASIC has announced that CommInsure is remediating customers affected by unfair telephone sales of life insurance
Stop Press | AUSTRAC has announced it has applied to the Federal Court of Australia for civil penalty orders against Westpac Banking Corporation (Westpac). AUSTRAC says that the civil penalty orders relate to (alleged) 'systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)'. AUSTRAC alleges Westpac 'contravened the AML/CTF Act on over 23 million occasions'
In Brief | The Australian Prudential Regulation Authority (APRA) has written to Responsible Superannuation Entity (RSE) licensees outlining new guidance for the implementation of the Treasury Laws Amendment (Putting Members' Interest First) Act 2019. The guidance includes details on the dangerous occupation exception election and withdrawal templates and answers to frequently asked questions
In Brief | APRA has released its response to submissions on the proposed modernised Economic and Financial Statistics (EFS) Reporting Standard ARS 722.0 Derivatives (ARS 722.0). The updated standard will be used to collect quarterly data on the derivatives activity of authorised deposit-taking institutions (ADIs) and registered financial corporations (RFCs)
In Brief | ASIC has granted a three-year exemption to all AFS licensees from the obligation in the Corporations Act to ensure that their financial advisers are covered by a compliance scheme and from the associated notification obligations
In Brief | The US Federal Deposit Insurance Corporation (FDIC) has released three reports analysing changes in the US banking system since the 1950s, with a focus on changes that have occurred since the 2008 financial crisis. The reports focus on the growth of nonbank lending over the period including: the shift in some lending from banks to nonbanks; how corporate borrowing has moved between banks and capital markets; and the migration of some home mortgage origination and servicing from banks to nonbanks