This is a service specifically targeted at the needs of busy non-executive directors (NEDs). 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 discuss the ACCC’s search for feedback on issues affecting retail deposit products to consider as part of its retail deposits inquiry, and the Commonwealth Government’s request for submissions on the proposed design of the Gas Mandatory Code of Conduct. We also note proceedings commenced against Myer in relation to alleged executive workplace bullying.
In Over the Horizon, we discuss the results of the Director Sentiment Index Survey which indicate that the main concerns faced by directors are inflation and rising interest rates.
GOVERNANCE + REGULATION
ACCC seeks views on competition and consumer issues affecting retail deposit products. On 21 April 2023, the Australian Competition and Consumer Commission (ACCC) announced it is seeking feedback from financial institutions, retail financial customers and other stakeholders in relation to competition and consumer issues affecting retail deposit products. Specifically, the ACCC published an issues paper for feedback on areas that the ACCC will consider in its retail deposits inquiry. These include how financial institutions set their rates on retail deposit products, how financial institutions compete with each other (and the nature and extent of this competition), and the potential for entry by new competitors. Directors of financial institutions should be aware that, in relation to this inquiry, the ACCC “can use compulsory information-gathering powers to gather information from financial institutions including their decision-making documents”. Submissions close on 19 May 2023. See ACCC media release.
Commonwealth Government seeks views on proposed design of the Gas Mandatory Code of Conduct. On 26 April 2023, the Albanese Government released a final consultation paper and draft regulations on the proposed design of the Gas Mandatory Code of Conduct (Gas Code). The Gas Code is part of a suite of measures announced by the Government to facilitate a well-functioning domestic east coast gas market with adequate supply at reasonable prices and on reasonable terms for both producers and consumers. The features of the proposed approach include: establishing a price anchor through a price cap and conditional exemptions; ensuring a level playing field for negotiations between users and producers; a strong penalty regime enforceable by the ACCC; and a requirement for gas producers to publish details on uncontracted, available gas. This is the second round of consultation, and the Government is seeking views from gas market participants on this approach relative to the original framework proposed in December 2022, as well as submissions from large gas providers on the supply and price commitments they would be willing to make in the context of a proposed exemption framework. Submissions close on 12 May 2023. See Consultation Paper. See also Draft Regulations.
Former employee commences proceedings against Myer in relation to alleged executive workplace bullying. On 24 April 2023, the Australian Financial Review reported that department store giant, Myer, is facing an unfair dismissal action from a former manager, who claims she was bullied and subjected to wrongful termination. Specifically, the former manager claims she was terminated in contravention of the general protections under the Fair Work Act 2009 (Cth). It is alleged that the manager’s boss used “belittling and offensive language… and was generally intimidating towards others” at a meeting. The former manager allegedly made several internal complaints regarding the alleged bullying and Myer’s alleged failure to provide a safe working environment. It is further alleged that the former manager was later terminated on redundancy grounds, despite her role being filled by a new employee shortly thereafter. Directors are reminded of the need to implement and maintain stringent complaints systems (including whistleblower systems) to prevent or mitigate disputes arising that may cause reputational and financial repercussions to companies. See news article. See also previous edition of Boardroom Brief regarding the importance of instituting effective whistleblower and complaints management systems.
OVER THE HORIZON
Director Sentiment Index Survey reveals inflation and rising interest rates are the top economic challenges for businesses. On 19 April 2023, the Australian Institute of Company Directors (AICD) released the First Half 2023 Director Sentiment Index (DSI) which surveys AICD member’s opinions on issues including the Australian and global economies, government policy and governance regulations. The results of the DSI point to mounting concerns over deteriorating business conditions with directors anticipating further weakening in the economic outlook over the next year. Of the 1,324 survey respondents, 56% said inflation and rising interest rates were their top concern, followed by skills shortages (52%) and the cost of living (33%). The effects of the COVID-19 pandemic remain, with 45% of directors saying it has impacted the risk appetite of their boards, listing it third behind cyberattacks (53%) and inflation (47%). Directors are also concerned about the impact of regulatory compliance, with AICD Managing Director and CEO, Mark Rigotti, noting that “[h]eavy handed and complex regulations are impacting productivity and economic growth”. More than 50% of directors surveyed believe that the Reserve Bank’s interest rate settings and tight monetary policy is negatively impacting businesses, almost three times higher than a year ago. AICD’s Chief Economist, Mark Thirwell, said that “while more approve the anti-inflationary measures than disapprove, [directors] are also concerned about the recession risk, threats to the housing market and the rate of business insolvencies”. See AICD media release. See also DSI Survey.