Essential Corporate News – Week ending November 12, 2021

HM Treasury: Financial Services Future Regulatory Framework Review - Proposals for Reform

On November 9, 2021 HM Treasury published a consultation paper which sets out the Government’s response to the feedback received in response to a previous consultation on the Future Regulatory Framework (FRF) Review which was established to consider how the financial services regulatory framework should adapt to be fit for the future, and in particular to reflect the UK’s new position outside of the EU. The consultation paper takes into account the public and Parliamentary debate and sets out a series of proposals for how the Government intends to take forward its approach to the FRF Review.

The proposals include the following:

• The changes needed to the regulators’ statutory objectives and regulatory principles to ensure the Government’s priorities for the sector are fully reflected across the breadth of the regulators’ responsibilities. 
• The proposals for ensuring that accountability, scrutiny and engagement arrangements with HM Treasury, Parliament, and stakeholders are appropriate given the regulators’ responsibilities. 
• The proposed approach to transferring responsibility for designing and implementing the direct requirements that apply to firms in certain areas of retained EU law to the regulators within a system established by Government and Parliament

The consultation paper sets out the Government’s proposed approach to these issues, and seeks views on a number of key considerations within them.

Responses are requested by February 9, 2022.

(HM Treasury: Financial Services Future Regulatory Framework Review - Proposals for Reform, 09.11.2021)

ISS: Proposed ISS Benchmark Policy changes for 2022 – Request for comments

On November 4, 2021 Institutional Shareholder Services Inc. (ISS”) announced the launch of its open comment period on proposed changes to its benchmark voting policies. Comments are requested by November 16, 2021.

The changes proposed by ISS to its UK and Ireland Benchmark Policy are as follows:

• Ethnic diversity: ISS will generally recommend against the chair of the nomination committee (or other directors on a case-by-case basis) if the company is in the FTSE 100 (excluding investment companies) and has not appointed at least one individual from an ethnic minority background to the board, as recommended by the Parker Review. There is also an expectation that FTSE 250, FTSE SmallCap, ISEQ 20 and AIM companies with a market capitalisation of over £500 million, (excluding investment companies) will appoint at least one individual from an ethnic minority background to the board by 2024. These companies are expected to publicly disclose a roadmap to compliance with best market practice standards of having at least one director from an ethnic minority background by 2024.
• Board accountability on climate: For the highest emitting companies, ISS is proposing to introduce recommendations to vote against the re-election of relevant directors or any other appropriate items at companies that have not made appropriate climate-related disclosures, such as according to the TCFD framework, or that have not set quantitative GHG reduction targets. It is noted that for 2022, companies defined as “significant GHG emitters” will be those on the current Climate Action 100+ Focus Group.
• Remuneration and non-financial ESG performance conditions: Changes are proposed to add language clarifying that the relevance and stringency of non-financial ESG metrics in compensation plans will be assessed similarly to financial metrics.

(ISS: Proposed ISS Benchmark Policy changes for 2022 – Request for comments, 04.11.2021)