FCA rolls out sustainable investment guidance

The Financial Conduct Authority (FCA) has announced a new set of measures designed to assist consumers in navigating the sustainable investment product market.

The measures include an anti-greenwashing rule applicable to all FCA-authorised firms, ensuring that sustainability-related claims are fair, clear and not misleading. The FCA is also consulting on supporting guidance for these rules.

Additionally, the FCA is introducing naming and marketing rules for investment products to ensure accurate use of sustainability-related terms.

To further aid consumers, the FCA has developed four labels to enhance understanding and trust in the sustainable investment landscape. These labels will be accompanied by consumer-facing information, providing clear insights into the key sustainability features of products.

The regime also includes detailed information targeted at institutional investors and consumers seeking in-depth data, covering pre-contractual, ongoing product-level and entity-level disclosures.

Distributors are required to ensure that this product-level information, including the labels, is readily available to consumers.

This comprehensive regime aims to bolster the UK’s position as a competitive centre for asset management and sustainable finance.

The anti-greenwashing rule covers all firms making sustainability-related claims, while the investment labels, disclosure and naming and marketing rules are specifically aimed at UK asset managers.

Targeted rules have also been introduced for distributors of investment products to retail investors in the UK.

After extensive consultation and stakeholder engagement, the FCA has developed these measures, aiming to inform and protect consumers, enhance competition and improve trust in the sustainable investment market.

Hayden Morgan, head of sustainability advisory, Pinsent Masons, said, “The FCA has clearly given some consideration to the operational implications of its new rules. There remain question marks around future interoperability considerations of the FCA’s anti-greenwashing rule and how the new rules will interface with the planned UK ‘green’ taxonomy.

“The interaction with other international disclosure requirements, such as Sustainable Finance Disclosure Regulation (SFDR), and potential labelling regimes, could create challenges for those managers having to respond to a dynamic sustainability compliance, operational implementation and disclosure landscape.”

© 2023 funds europe

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