FCA updates – Naming and Marketing ‘flexibility’

The FCA has made two welcome announcements recently which point to the regulator listening to sensible industry feedback (including our own) and improving their understanding the highly nuanced sustainable investment arena – where the ultimate aim must always be to serve clients (people, the public etc) better.

The FCA  announced yesterday that they are offering temporary flexibility for funds that are seeking SDR labels but risk being caught by the new Naming and Marketing rules because approval has not yet been granted.

Our view is that this is a positive step, although more needs to be done in order for the regulator to get the balance right.

The point being that we need to raise standards, encourage innovation and ensure that offering products that focus on sustainability make sound business sense.

This development supports our hope that teething issues will be ironed out. We welcome their continued engagement and trust this will continue.

The FCA information stated:

“To support firms, today we have published a statement offering limited temporary flexibility for four months for the naming and marketing rules in relation to a sustainability product^[1] which is a UK authorised investment fund in exceptional circumstances where the firm:

• has submitted a completed application for approval of amended disclosures in line with ESG 5.3.2R for that fund by 5pm on 1 October 2024; and
• is currently using one or more of the terms “sustainable”, “sustainability” or “impact” (or a variation of those terms) in the name of that fund and is intending either to use a label, or to change the name of that fund.”

Full information is available here:   https://www.fca.org.uk/news/statements/fca-sets-out-temporary-measures-firms-naming-and-marketing-sustainability-rules

SDR link:  https://www.fca.org.uk/publications/policy-statements/ps23-16-sustainability-disclosure-requirements-investment-labels

The FCA also announced last week that they will be dropping their Stewardship effectiveness KPI because of complexity – this was reported in Responsible Investor, 6 September 2024.    (A victory for common sense imh 🙂 )

Related FCA support information is here.