Following the Conservative Party’s decisive general election victory, the likelihood is that the UK will leave the EU on 31 January 2020 with a withdrawal agreement. This month, in-house lawyers should also keep an eye on developments on the future of audit, climate change and artificial intelligence.
The Conservative Party’s general election victory, and its substantial majority, has increased the likelihood that the UK will leave the EU on 31 January 2020 with a withdrawal agreement. On 19 December 2019, the European Union (Withdrawal Agreement) Bill 2019-20 (WAB 2019-20) was introduced to the House of Commons (HoC). On 20 December 2019 the HoC approved its second reading, enabling the WAB 2019-20 to proceed to the next parliamentary stages.
Independent review of audit
BEIS has published the final report of its independent review into the quality and effectiveness of audit by Sir Donald Brydon. Recommendations include:
- A redefinition of audit and its purpose, intended to provide greater clarity about who audit is for and to reinforce its public interest function.
- The creation of a new independent corporate auditing profession, to be governed by overarching principles.
- New reporting requirements for directors about the company’s resilience, the company’s responsibilities to the public interest, and audit policy.
- A requirement for audit committees to publish their minutes.
The FRC has also published final amended versions of its Ethical and Auditing Standards.
Although the outcome of the main international climate change negotiations in Madrid was not very successful, there were important climate change commitments made by many companies and other stakeholders, including to achieve net zero carbon by 2050 or, in some cases, by 2030.
The European Commission has recently announced its European Green Deal. This includes a plan to introduce a “European Climate Law”, which would set a statutory target for the EU to be carbon neutral by 2050. The Commission will introduce the proposed legislation in March 2020. The Commission will also review the Non-Financial Reporting Directive (2014/95/EU) so that companies and financial institutions increase their disclosures on climate and environmental data.
On 2 December 2019, the Information Commissioner’s Office (ICO) published its first draft regulatory guidance into the use of artificial intelligence (AI). The guidance, Explaining decisions made with AI, is co-badged with The Alan Turing Institute and is out for consultation until 24 January 2020. The draft guidance includes four principles that organisations must consider when developing AI decision-making systems:
- Be transparent.
- Be accountable.
- Consider context.
- Reflect on impacts.
The ICO is also finalising its draft framework and guidance on its AI Auditing Framework, which it plans to publish for consultation in early 2020.
In addition, the European Commission has published a report on liability for AI and other new technologies, which discusses the challenges posed by new technologies in areas such as:
- Product liability.
- Damage to data.
The report is part of the Commission’s wider AI strategy, contributing to the work around ensuring an appropriate legal and ethical framework for new technology development.
Incoterms® 2020 come into force
The Incoterms® 2020 will come into effect on 1 January 2020. The Incoterms® are a standardised set of international trade terms that provide a common set of rules that traders based in different countries can choose to incorporate into contracts for the sale of goods.
European Commission’s assessment of the Code of Practice on Disinformation due
In the autumn, the European Commission published the first annual self-assessment reports from the online platforms and technology companies who are signatories to the Code of Practice on Disinformation detailing policies, processes and actions undertaken to implement their respective commitments under the Code. The Commission will present its comprehensive assessment of how the Code is working in early 2020.
Chancellor to consult on Retail Prices Index reform
Chancellor Sajid Javid’s consultation on Retail Prices Index (RPI) reform is expected to begin in January 2020. The intention is for the government and the UK Statistics Authority to publish a response before the 2020 Spring Statement, and the end of the financial year.
Dates for your diary
1 January 2020
- The UK Stewardship Code 2020 will apply from this date.
- Commission Delegated Regulation on regulatory technical standards on the specification of a single electronic reporting format comes into force.
15 January 2020
Closing date for responses to EC’s consultation on updating the Blue Guide on EU product rules.
16 January 2020
- EDPB consultation on guidelines on data protection by design and by default ends.
- Closing date for comments on class 1A employer NICs liability for termination payments.
- Deadline for responses to the Law Commissions’ second consultation on driverless cars.
20 January 2020
Electronic working becomes mandatory for legally represented parties in the Senior Courts Costs Office.