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Greg Kilminster
Head of Product - Content
CUBE RegNews:
5th June
FCA publishes further LIBOR update
With just a month to go before the final switch from LIBOR to risk-free interest rates, the Financial Conduct Authority (FCA) has published its feedback statement FS23/2 to CP 22/11 (Winding down ‘synthetic’ sterling LIBOR and US dollar LIBOR). FS23/2 confirms no changes to the FCA’s original proposals are required.
The feedback statement provides the following next steps:
- On 1 July 2023, FCA will publish formal legal notices which will complete the implementation of the decisions announced on 3 April 2023.
- The regulator reminds market participants that they must take all necessary steps to ensure that they understand how their contract terms interact with the winding down of LIBOR. It is up to parties to take their own legal advice on the exact wording of their contracts.
- Market participants must continue to actively transition contracts that reference US dollar LIBOR, and not rely on the synthetic settings. Synthetic US dollar LIBOR is only a temporary bridge and is expected to cease at end-September 2024. Synthetic LIBOR settings will not continue simply for the convenience of those who could have transitioned their contracts but have not done so.
- The FCA also reminds market participants that the synthetic 3-month sterling LIBOR setting is expected to cease at end-March 2024. Market participants using this rate must take the necessary action to prepare for this.
Click here to read the full RegInsight on CUBE’s RegPlatform
ASIC chair: ESG change is coming – be prepared
In a recent speech, Joe Longo, chair of the Australian Securities and Investments Commission (ASIC) highlighted the significance of Environmental, Social, and Governance (ESG) considerations in business reporting and the fight against greenwashing. The ASIC chairman stressed that ESG is not just a passing trend but a crucial aspect of fair and efficient markets and confident investment.
The speech acknowledged the progress made by large Australian companies in engaging with climate-related matters and implementing sustainability reporting. According to a KPMG survey, Australian companies outperform their global peers in recognising climate as a financial risk, reporting against climate-related financial disclosures, and addressing social risks to the business.
However, the ASIC chairman cautioned against complacency and emphasised the need for rigorous, robust, and comprehensive ESG disclosures. He noted that markets and investors increasingly rely on this information for decision-making, and misleading or deceptive practices are unacceptable.
The speech also addressed the issue of greenwashing, which has become a priority for ASIC. Greenwashing refers to misleading or exaggerated claims regarding sustainability practices. ASIC has taken enforcement actions against companies found to engage in greenwashing and highlighted four categories of problematic behavior:
- baseless net zero statements,
- misleading terms like “carbon neutral” or “green,”
- overstating sustainability-related investment screens, and
- using inaccurate or vague labels in sustainability-related funds.
ASIC’s efforts align with the Australian government’s broader sustainable finance agenda, including mandatory climate disclosures and ESG labeling and taxonomy. The regulator aims to enforce existing legal obligations and prevent greenwashing by promoting trust in sustainable finance-related products, services, and disclosures.
The speech also recognised the global significance of the ESG space and emphasised ASIC’s engagement at both the domestic and international levels. ASIC is actively involved in initiatives and task forces, collaborating with regulators and stakeholders to stay informed and prepared for the changes unfolding in the financial services sector.
Concluding, Longo emphasised the need for companies to strengthen governance and disclosure standards, combat greenwashing, and prepare for the evolving ESG landscape. The regulator remains committed to maintaining high standards and ensuring that businesses adapt to forthcoming changes effectively.
Click here to read the full RegInsight on CUBE’s RegPlatform
ESSA Bank & Trust to pay $3 million to settle redlining allegations
ESSA Bank & Trust (ESSA) has reached a settlement with the Justice Department, agreeing to pay more than $3 million to resolve accusations of engaging in lending discrimination through redlining practices in Philadelphia’s majority-Black and Hispanic regions. Redlining is the practice of illegally denying credit services to individuals based on the racial or ethnic makeup of their communities.
According to the complaint filed in federal court, between 2017 and 2021 ESSA allegedly failed to provide mortgage lending services and neglected the credit needs of the predominantly Black and Hispanic regions in the Philadelphia metropolitan area.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division stated: “Residents of communities of color have been unlawfully denied equal access to credit and shut out of economic opportunities for too long.” She emphasised that redlining perpetuates segregation and widens the racial wealth gap, and that the settlement demonstrates the department’s commitment to holding banks accountable for modern-day redlining and promoting fair lending in communities of colour.
Click here to read the full RegInsight on CUBE’s RegPlatform
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