Key Governance Developments - August 2019

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French financial firms fall short on environmental disclosures: government

Financial firms subject to France's environmental disclosure laws have fallen short of their reporting requirements, according to the government. Only half of the 48 large insurers, pension funds and asset managers subject to the requirement published a full report on their environmental, social and governance policies, while 21 published inadequate reports without explaining the gaps as required by law, and three failed to publish a report at all. The French ministers for the environment and finance, who are responsible for implementing the law, have refrained from imposing strict obligations on the companies but have detailed best practice.

Best source: Les Echos (subscription required, in French)


ESMA surveys identify governance issues among gaps in fintech regulation

Two surveys of national regulators by the European Securities and Markets Authority have identified gaps in the licencing regime for financial technology companies, with the biggest shortfalls relating to crypto-assets, initial coin offerings and distributed ledger technology. National regulators say they need greater clarity at the EU level on the definition of financial instruments and the legal nature of crypto-assets, as well as regarding governance and risk management relating to cyber-security and cloud-based outsourcing.

Best source: European Securities and Markets Authority


New Revolut COO promises enhanced governance and controls 

Revolut’s new chief operating officer, Richard Davies, one of a number of senior recruits from the traditional finance sector to join the digital bank in recent months, has promised to strengthen the institution's governance as it seeks to raise up to $500m from investors by the end of the year. Revolut, which has almost 6 million customers and is valued at $1.7bn, has faced criticism over the quality of its compliance systems, an aggressive working environment and links to Russia.

Best source: Financial Times (subscription required)


UK proposes former Goldman banker Dingemans to head audit regulator

The UK government is proposing former Goldman Sachs banker Simon Dingemans to head the Financial Reporting Council, the regulator for the accounting industry in the UK and Ireland. After heading European mergers and acquisitions at Goldman, Dingemans spent eight years at GlaxoSmithKline before leaving his post as chief financial officer earlier this year. The regulator has come under attack for lacking adequate authority, and is due to be replaced by a more powerful Audit, Reporting and Governance Authority.

Best source: The Times (subscription required)

Sports Direct auditors resign over late disclosure of Belgian tax bill

Accountancy firm Grant Thornton will resign as auditors to London-listed retailer Sports Direct after the company informed it of a €674m tax bill in Belgium just hours before Sports Direct’s accounts were due to be signed off. Publication of the company’s annual results had already been delayed, and further deadlines for filing were missed. The company has admitted it is struggling to find other auditors that are willing to work for it. One Sports Direct shareholder, Holland Advisors portfolio manager Andrew Hollingworth, has urged Sports Direct to devote more resources to corporate governance, and learn from other founder-controlled companies such as pub and hotel chain JD Wetherspoon.

Best source: Financial Times (subscription required)

See also: Financial Times (subscription required)