Climate Disclosure

Top Story | Worse than in 2011? ASIC Report 593 reminds directors (among other things) of their legal obligation to report on climate risk.

In Brief | The Hong Kong Securities and Futures Commission (SFC) has announced a new strategic framework to contribute to the development of green finance in Hong Kong. Among other things, the strategy states that 'Our top priority in green finance is to enhance listed companies’ reporting of environmental information emphasising climate-related disclosure, taking into account the Mainland’s policy direction to target mandatory environmental disclosure by 2020, and aiming to align with the TCFD recommendations'. The strategy states that amendments to the Listing Rules and other possible means to achieve this will be considered.

Diversity Disclosure

Room to improve: The UK FRC has called on the FTSE 350 to improve the quality of diversity reporting.

Other Developments

United States | Former CEO and company pay the price for non-disclosure of reputational risk: SeaWorld, its former CEO have agreed to pay more than $5m to resolve SEC fraud charges that they misled investors regarding the impact of the documentary Blackfish on Seaworld's reputation and business.

In Brief | The US Department of Justice has reportedly submitted a 'voluntary request' concerning Tesla CEO Elon Musk's recent announcement of plans to take the company private. Noting that SEC has also launched a separate civil investigation into Mr Musk's statements, The FT comments that the DOJ's request is the most 'significant escalation' of the government’s scrutiny of Mr Musk’s statement and suggests that it is a further setback for Tesla in the wake of a number of senior executive departures.

Australian Securities and Investments Commission (ASIC)

Design and distribution obligations in relation to financial products: The Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 introduced.

Competition added to ASIC mandate, removal of requirement to engage staff under PSA: Treasurer Josh Frydenberg has welcomed the passage of Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Bill 2018. 

In Brief | Deadline to join AFCA was 21 September: ASIC issued a final 'warning' to financial firms (Australian financial services licensees, Australian credit licensees, authorised credit representatives and superannuation trustees) to join AFCA before the deadline, cautioning that 'Financial firms who do not do this will be in breach of the law'. ASIC writes that although it is finalising an instrument to enable firms to notify ASIC about their AFCA membership details over an extended period 'This does not extend the period for joining AFCA'.

In Brief | Treasurer Josh Frydenberg has announced that Peter Kell has resigned as a Deputy Chair of ASIC after seven years of service, effective 6 December 2018. 'The Coalition Government thanks Mr Kell for his contribution to ASIC and wishes him well in his future endeavours' the Treasurer said.

Australian Prudential Regulation Authority (APRA)

In Brief | Treasurer Josh Frydenberg has announced the appointment of Mr John Lonsdale as a full-time member and second Deputy Chair to the Australian Prudential Regulation Authority (APRA) for a period of 5 years. 'A second Deputy Chair will add experience to APRA’s Board, with Mr Lonsdale’s appointment ensuring a strong blend of supervisory experience, industry knowledge and policy expertise within its Executive Group' he said in a statement.

New Zealand Consumer Survey 2018 has found 71% of the NZ public expect their funds to be invested ethically and 62% said that they are also ready to shift their funds if company practices are inconsistent with their values.

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

Royal Commission hearings Round 6 Insurance hearings: overview of week 2 life insurance and general insurance case studies

Other Developments

ASIC has announced that it has commenced civil penalty proceedings against Dover Financial and its sole director, Mr Terry McMaster in connect with Dover's Client Protection Policy.

In Brief | The AFR reports that ASIC has written to FinTech Australia cautioning that ASIC 'will consider regulatory action where appropriate' if fintech lenders fail remove unfair contract terms from their loan contracts as Prospa has done. Reportedly the clauses removed by Prospa were flagged as problematic in ASIC Report 565: Unfair contract terms and small business loans released in March.

In Brief | ASIC has extended to 30 September 2018, licensing relief for foreign financial services providers to allow them to provide financial services to Australian wholesale clients without needing to hold an Australian Financial Services Licence.

In Brief | Further superannuation reform? The Australian labor party has announced that if elected it intends to enact further superannuation reform to address the gender superannuation gap. This includes a plan to add $400 million to the super balances of women in receipt of Commonwealth Paid Parental Leave entitlements (which will also ally to those receiving Dad and Partner Pay payments) and phasing out the $450 minimum monthly income threshold for eligibility for the superannuation guarantee. Industry Super Australia has reportedly welcomed the announcement as a positive start to closing the gap.

Supply Chain Risk

In Brief | The Federal Modern Slavery Bill passed the House of Representatives on 18 September and is now before the Senate.

Whistleblowing

United States | The National Whistleblower Center has formally requested that SEC extend the public comment period for proposed changes to the rules governing the SEC Whistleblower Program over concerns some of the proposals announced by the Commission (including the proposal to 'cap' payments') reflect the 'radically anti-whistleblower' policy positions of the US Chamber of Commerce.

Reputational Risk

In Brief | The WSJ reports that Wells Fargo has publicly acknowledged the possible negative commercial impact that reputational damage over media reports of recent governance scandals may be having on its commercial lending for the first time. Reportedly Wells' CFO gave a press conference in which he said that he expected to see business loans fall from second quarter levels, due to a 'host of factors' including reputational issues. 'Shifting blame to those who helped bring its lapses to light is unlikely to reassure potential clients or investors that Wells Fargo is taking its issues as seriously as it should. The bank’s competitors are pulling ahead while it remains stuck in the mud' The WSJ comments.

Royal Commission into Aged Care Quality and Safety: Public feedback requested to develop detailed terms of reference closes 25 September.

In Brief | FEG scheme reforms Bill introduced: A Bill intended to address corporate misuse of the Fair Entitlements Guarantee Scheme (FEG) was introduced into the House of Representatives on 20 September.