Governance News 28 August 2019

60 minute read (PDF download) 27.08.2019 Mark Standen, Siobhan Doherty, Kate Hilder

This week's issue features (among other things) coverage of progress towards implementing the Hayne Commission's recommendations (including consultation on proposed draft legislation to implement a best interests duty for mortgage brokers, and broker remuneration reform).

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What's driving the gender pay gap in Australia? KPMG has determined that gender discrimination remains the largest contributing factor
United Kingdom | Too early to say whether it's a blip or a trend? The latest High Pay Centre/CIPD report into trends in executive pay has found that overall, FTSE 100 CEO pay has fallen to its lowest level since 2010
The beginning of a shift in approach? Lion Co has reportedly moved to ban questions on past salary in job interviews as a means of tackling the gender pay gap
New pay gap? The WSJ has found that there is on average a 16% difference between what S&P500 firms report paying their CEOs vs the value of the pay package the CEOs actually receive
In Brief | Could there be an upside to CEO Incentives? A recent post on Harvard Law School Forum presenting the results of a five year study has found that when a higher proportion of CEOs in a nation receive incentives, that nation's GDP increases significantly in the following years. The researchers conclude that 'it appears ubiquitous CEO incentives may result in future positive societal benefits at the macroeconomic national level'

Meetings and proxy advisers Navigation Show below Hide below

United States | SEC has published guidance regarding the proxy voting responsibilities of investment advisers and interpretation and guidance regarding the applicability of proxy rules

Regulators Navigation Show below Hide below

Stop Press | ASIC has released its corporate plan for 2019-2023
In Brief | 'The regulatory pendulum has swung': In his speech to the risk management association APRA Chair Wayne Byres reflected on the changes that have taken place over the past five years, noting among other things the shift away from pursuit of a 'strong deregulatory agenda' towards a broader and interventionalist approach in which culture, governance and accountability are a strategic priority for the regulator. 'We are now in a world where APRA is being tasked to do more, and more assertively, than we have traditionally done' Mr Byres said 'overall there is no doubt that expectations of APRA have grown, and they have pushed us into new fields of endeavour. There is no sign that tide is going to turn soon'

Corporate social responsibility and sustainability Navigation Show below Hide below

CII 'respectfully disagrees' with the position taken by Business Roundtable? CII has expressed concern that the recent Business Roundtable Statement redefining the purpose of a corporation undermines management accountability to investors
In Brief | IFM Investors has announced that seven major Australian infrastructure assets (including Ausgrid) have set carbon emissions targets representing emissions reductions of more than 200,000 tonnes CO2 equivalent by 2030 – the same, according to IFM Investors, as removing almost 70,0001 cars from the road. The Guardian quotes IFM head of Australian infrastructure Michael Harma as saying that the initiative 'represents a genuine commitment, and start, to aligning our assets to the Paris Agreement, and it makes perfect business sense by reducing costs, mitigating future business risks and contributing to outcomes that our customers value'

Financial Services Navigation Show below Hide below

Top Story | Invest in regtech or face the consequences?
Top Story | Moving on FSRC broker reforms: The government is consulting on draft legislation to implement a best interests duty for mortgage brokers and broker remuneration reform
Financial advisers have reportedly raised concerns that the proposed new disciplinary body to be established in line with FSRC recommendation 2.10 is excessive
First ASIC FSRC case study: ASIC has commenced proceedings against NAB in connection with (alleged) misconduct identified by the Financial Services Royal Commission
Consumer Credit Insurance (CCI) remains a focus for ASIC: ASIC has announced that Allianz will refund $8m in consumer credit insurance premiums and fees following an ASIC investigation, ASIC has also flagged that it has commenced investigations into a number of other entities
An opportunity for advisers? ASIC's report into financial advice has identified cost, distrust of financial advisers and the difficulty of engaging with the industry as key barriers to consumers seeking financial advice
ASIC is monitoring the shift away from grandfathered commissions and is due to report to the federal government on the transition by mid-2021
AFCA to 'name and shame'? ASIC has approved an AFCA rule change to enable the naming of firms in determinations
ASIC product intervention power consultation: ASIC proposes to make market-wide product intervention orders relating to the issue and distribution of OTC binary options and CFDs
ANZ Chair David Gonski has outlined some of the issues identified in ANZ's culture/governance self-assessment, and the measures the lender is implementing to address them
Pushing ahead with reform of the financial services sector: Senator Jane Hume has provided an update on the government's plans for regulatory reform. Among other things, Ms Hume called on the superannuation sector to be more proactive in addressing known issues impacting member outcomes
IOOF update on APRA licence conditions and board renewal
In Brief | APRA is reportedly planning to intervene to prevent some superannuation funds 'gaming' the system. The AFR reports that APRA plans to release a discussion paper about the apportionment of growth vs defensive assets later in the year, though notes it is 'too early' to say how the findings may be incorporated into reporting standards/prudential guidance

Risk management Navigation Show below Hide below

Top Story | Entire societies and economies are built upon ethics and trust. MinterEllison's latest podcast, featuring Rupert Younger (Oxford University Centre for Corporate Reputation) and Geraldine Johns-Putra takes a deep dive into this theme
AUSTRAC has reportedly called for unregistered money transfer dealers, who the regulator considers to be at risk of exploitation by sophisticated criminal actors, to 'stop now'
OAIC's 2019-2020 Corporate Plan flags the development of a code of practice for digital platforms to provide stronger online protections as a key action
In Brief | Second New Payments Platform breach? Reportedly more than 90,000 Australian bank and credit union customers using the RBA's real-time New Payments Platform have had their bank details and other personal data exposed. Reportedly, PayID was breached via Credit Union Australia, in the second major attack on the payment management system in recent months