The Financial Conduct Authority is ramping up its ESG push as it plans to extend new fund marketing rules to portfolio managers.
The regulator wants to bring wealth managers that manage pools of investments into scope for its incoming sustainable investments labelling rules, according to a 23 April statement.
The FCA has also published guidance to help City firms comply with incoming anti-greenwashing legislation as it continues to crack down on firms overselling their green credentials.
“Confirming the new anti-greenwashing guidance and our proposals to extend the Sustainability Disclosure Requirements and investment labels regime are important milestones that maintain the UK’s place at the forefront of sustainable investment,” FCA ESG director Sacha Sadan said. “Our good and poor practice anti-greenwashing examples will help firms market their products in the right way.”
The FCA said the proposals would target wealth managers with retail client offerings, including model portfolios and bespoke portfolio management services.
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These firms would be barred from using ESG-related terms in their portfolio names and marketing material unless they successfully apply for a label.
Those that look after professional clients can opt into the labelling regime, but will not be subject to the naming and marketing requirements and associated disclosures.
The FCA estimates SDR will result in a one-off cost for wealth managers of £92.3m, including changes to marketing materials, compliance, staff training and updating IT systems. On an ongoing basis it anticipates this levelling out to £52.7m annually.
The FCA’s SDR will be rolled out over the course of this year, starting with its anti-greenwashing rule on 31 May.
The rule, which forms the centrepiece of its greenwashing crackdown, prevents companies from making “exaggerated, misleading or unsubstantiated claims” about ESG.
Companies had previously criticised the FCA for failing to provide a steer and guidance on the new legislation with a month to go before it is implemented.
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