Welcome to Edition 127 of Boardroom Brief.
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.
In this Edition, we focus on three notable developments on the ASIC front: ASIC’s update on implementation of the Royal Commission recommendations, ASIC’s first product intervention order and Treasury’s proposals for new ASIC powers.
YOUR KEY BOARDROOM BRIEF
ASIC releases update on implementation of Royal Commission recommendations. ASIC’s Update on its planned actions in response to the Final Report of the Financial Services Royal Commission focuses on implementation of the key priorities in its Corporate Plan 2019-23 (click here for our summary), the ongoing work of its Corporate Governance Taskforce in assessing existing governance practices around non-financial risk and variable remuneration structures for senior management, and ASIC’s commitment to supporting the Government’s Implementation Roadmap (released last month). ASIC’s media release highlights that more investigations are under way and more cases are coming before the courts. ASIC Chair James Shipton’s specific mention of recent actions in the insurance sector underlines the cross-sectoral nature of ASIC’s surveillance and enforcement activities.
ASIC makes product intervention order to ban short-term lending model. By using its product intervention power (an important addition to ASIC’s regulatory toolkit, introduced in April), ASIC has shut down a loophole allowing lenders and associates to charge fees that equate to effective interest rates as high as 990% of the loan amount. Short term credit providers will be exempt from conduct, licensing and responsible lending obligations if fees charged for a loan of up to 62 days do not exceed 5% of the loan amount and 24% per annum interest. See ASIC’s media release.
Treasury consults on new powers for ASIC. In line with ASIC’s recommendations in its 2017 ASIC Enforcement Review Taskforce Report, Treasury is consulting on draft legislation which is intended to further strengthen ASIC’s enforcement and supervision powers to protect consumers. The proposals include, among others, strengthening ASIC's licensing and banning powers, harmonising ASIC's search warrant capabilities and improving ASIC’s access to intercepted information for investigating or prosecuting serious offences. The various proposals and explanatory material are accessible on the Treasury’s consultation page. Submissions can be made until 9 October 2019. See also Treasurer Josh Frydenberg’s media release. Directors should note that the Government’s willingness to back ASIC with extended powers shows its keenness to demonstrate positive momentum in enforcement activities following the Hayne Royal Commission.
THE WEEK AHEAD
Critical minerals in focus. A high-level delegation will accompany the Prime Minister on his trip to Washington later this week to discuss opportunities for greater collaboration in the development of alternative supplies of critical minerals such as copper, cobalt and rare earths for delivery to the defence sector in the US, as trade tensions with China (which supplies 80% of global rare earth minerals, for example) increase. Directors of companies in the sector should be alert for potential opportunities arising out of the discussions.
ASIC’s consultation on whistleblower policy guidance closes on Wednesday. The new obligation for public companies, large proprietary companies and corporate trustees of superannuation entities to implement a whistleblower policy applies from 1 January 2020. The guidance covers matters that must be addressed by the whistleblower policy as well as best practice guidance on establishing, implementing and maintaining a policy. You can access the proposed guidance here.