The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK, announced that it would not currently proceed with its proposal to extend its new Sustainability Disclosure Requirements (SDR) and sustainable investment labelling regime to portfolio managers, despite “broad support” for the rules, following industry feedback on the proposal.
The proposal, announced in April 2024, followed the release by the FCA of its SDR requirements for asset managers in November 2023, which included an anti-greenwashing rule for sustainability-related product claims, as well as rules for naming and marketing funds based on their sustainability characteristics, and for the use of a new sustainable investment product labelling regime.
While the initial SDR was developed primarily for retail investors, the new proposal would extend the requirements to firms that manage a group of investments for consumers, with a focus on wealth management services for individuals and model portfolios for retail investors.
Following its industry consultation on the new proposal, however, the FCA said in February 2025 that it would delay its plans to publish a Policy Statement on the proposal in Q2 2025, and in its new update, the regulator said that it has now “decided that it is not the right time to finalise rules on extending SDR to portfolio management.”
Among the key feedback responses highlighted in its update, the FCA said that respondents called for more time to make the necessary changes to comply with the SDR, as well as for calls for greater clarity in areas including the application of naming rules to different types of portfolios and client relationships, the interaction of the FCA’s proposed disclosures with other sustainability reporting requirements, and how labelling criteria would work in practice for portfolio managers, among other factors.
The FCA said:
“Overall, there is broad support for extending SDR to portfolio management, with most respondents agreeing this is an important step toward improving consumer outcomes. However, we want to take time to carefully consider the challenges and ensure that portfolio managers are positioned to implement the regime effectively before introducing requirements.”
