Roundup 28 January 2022
In developments in recent weeks, the Economic and Social Research Institute (ESRI) published a working paper, co-authored by officials from the Department of Finance, entitled “SME Financial Distress and the Macroeconomic Recovery”; the European Central Bank has recently published its supervisory priorities and risk assessment for 2022-2024. The 3 priorities aim to ensure that banks emerge from the pandemic healthy, seize this opportunity to address structural weaknesses via effective digitalisation strategies and enhanced governance, and tackle emerging risks
Read more on these and other developments that may be of interest to members below.
Financial Reporting
IAASA has published an information note entitled “Reporting Climate Change”.
The European Financial Reporting Advisory Group (EFRAG) has published its Draft Comment Letter in response to the IASB's Exposure Draft 2021/9 IAS 1 Non-Current Liabilities with Covenants. Comments can be submitted to EFRAG until 9 March 2022.
Following the completion of its inaugural year, the UK Endorsement Board has published its regulatory strategy for 2022/2023 for consultation. The consultation runs until 1 March 2022.
Sustainability
The Project Task Force on European Sustainability Reporting Standards (PTF-ESRS) of the European Financial Reporting Advisory Group (EFRAG) has released working papers on the first draft standards on sustainability reporting.
IAASA has published an Information Note “Reporting Climate Change”.
Insolvency
The Institute is hosting a free one hour webinar on 10 February on practical considerations for the small company administrative rescue process (SCARP). The process, how to prepare for it, what to look out for and key matters to be aware of when considering it will be discussed as well as exploring some practical issues including dealing with creditors and the pros and cons of a company entering the process. You can register for the webinar here.
Other Areas of Interest
Government’s legislative agenda.
The Government has recently published its legislative programme for Spring Session 2022. Read the press release here and the contents of the programme here. Proposed legislation which may be of interest, all of which is on the Government’s priority list, includes the Right to Request Remote Work Bill and the Protected Disclosures (Amendment) Bill, which is required to transpose EU obligations. Also on the priority list are the Sick Leave Bill and the Central Bank (Individual Accountability Framework) Bill. The last three are some way advanced with heads of bill of each approved.
Readers may be aware that Public Policy in the Institute has made representations to the DETE about the Sick Leave Bill. The latest correspondence is available here. The scheme of the Right to Request Remote Work Bill was published recently. See further below.
Also on the agenda is another companies’ amendment bill. This is titled the Companies (Miscellaneous Provisions) Bill and is stated to provide for miscellaneous amendments to the Companies Act 2014.Others of possible interest are a Limited Partnership Bill to modernise the Limited Partnership Act 1907, a Cyber Security Bill and a Cybercrime Bill, a Personal Insolvency Amendment Bill and a Charities Amendment Bill.
The Government also published a draft Scheme of the Right to Request Remote Working Bill 2022 this week. Under it an employee who has completed at least 26 weeks of continuous service can submit a request for remote working. The employer must give the request due consideration but may decline if the proposal requested is not suitable on business grounds. The draft legislation outlines 13 non-exhaustive potential business grounds for an employer to refuse the request. Refusals can be appealed to the Workplace Relations Commission. Every employer will be required to establish and maintain a written statement of remote working policy. On publication the Tánaiste said that he wanted the legislation published by Easter and passed by the Oireachtas by the summer recess.
The Pensions Authority recently highlighted amendments to the Trust RACs (Disclosure of Information) Regulations 2007 by new regulations which came into force in 2021, the Trust RACs (Disclosure of Information) (Amendment) Regulations 2021. The Pensions Authority gives an overview of the main changes introduced by the regulations on its website and that information can be accessed here.
The Economic and Social Research Institute recently published a working paper, co-authored by officials from the Department of Finance, entitled “SME Financial Distress and the Macroeconomic Recovery.” One of the paper’s key findings was that in the absence of the extensive government support provided to SMEs throughout the pandemic, the distress rate of firms would have been 72 per cent higher. Overall, the paper estimates that the share of firms making losses throughout 2020 and 2021 could have been around one-third higher if supports were not available.
The European Commission and national consumer protection authorities recently released the results of an EU-wide website screening on online consumer reviews. Consumer protection authorities concluded that at least 55% of the checked websites potentially violate the Unfair Commercial Practices Directive which requires that truthful information is presented to consumers to allow an informed choice. You can read more information about the results here. National authorities will now follow up with traders to rectify their websites and initiate enforcement action where necessary.
The European Central Bank has recently published its supervisory priorities and risk assessment for 2022-2024. The 3 priorities aim to ensure that banks emerge from the pandemic healthy, seize this opportunity to address structural weaknesses via effective digitalisation strategies and enhanced governance, and tackle emerging risks including climate-related and environmental risks, IT and cyber risks. You can read more about this here.
This week the Irish Central Bank Governor spoke to the Institute of Directors about the Irish economy. He said that overall, the story on the Irish economy is very positive. On inflation he said that in Ireland it will remain above pre-pandemic levels and risks to the inflation forecast are judged to be on the upside. He spoke about navigating uncertainty, the next decade will continue to be characterised by rapid change in our economies and in the financial system. Everyone must accelerate their pace of change to meet the challenges and the community’s expectations. You can read the full narrative here.
There was also news of a positive economic outlook in the Central Bank’s first quarterly bulletin of 2022.It reported continued strong growth in demand and employment but also higher inflation. The bulletin also contains two interesting articles, one is on The Macroeconomic Implications of Climate Change for Central Banks which explores the key challenges presented by climate change for central banks. The other is titled Behavioural Economics and Public Policymaking.
The UK Financial Conduct Authority has opened a consultation on guidance for firms regulated by it which seek to limit their liability to creditors and/or shareholders. The FCA says it has seen an increase in the number of firms developing proposals, such as scheme of arrangements, to deal with significant liabilities to consumers. In its proposed guidance the FCA has made it clear to firms seeking to limit their liabilities that they should provide the best possible outcome for customers, which will include providing the maximum amount of funding possible to meet compensation claims by customers. You can read the press release here and the draft guidance here. The consultation is open until 1 March 2022.
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