The Consultation Paper (CP) 24/8 Extending the Sustainability Disclosure Requirements (SDR) regime to Portfolio Management, follows the FCA’s October 2022 con­sulta­tion paper (CP22/20) and corresponding Policy Statement (PS 23/16) on SDR and investment labels, which introduced a package of measure for fund managers. 

The package of measures aimed to protect consumers by ensuring that they are provided with all of the information necessary to make informed investment decisions.  The package of measures ultimately aimed to provide greater transparency, consistency and trust in the market for sustainable investment products and sought to minimise greenwashing by companies.  

The FCA is proposing to extend the SDR and investment labels regime to all to all forms of portfolio management services, including where the portfolio management offering (the agreements or arrangements) are model portfolios, customised portfolios and/or bespoke portfolio management services (tailored to the clients’ needs and preferences).  The FCA indicates that as the SDR and labelling regime has been developed primarily for retail investors, the proposals to extend the regime are primarily aimed at wealth management services for individuals and model portfolios for retail investors.  Firms offering portfolio management services to professional clients (or institutional investors) can alo opt in to the labelling regime.

The FRC is proposing that:

• The labelling and naming and marketing requirements, and the associated consumer-facing and pre-contractual disclosures, come into force on 2 December 2024.
• Firms with assets under management (AUM) greater than £50 billion will need to produce on-going product-level and entity-level disclosures by 2 December 2025
• Firms with AUM greater than £5 billion will need to start producing entity-level disclosures by 2 December 2026.

The consultation closes on 14 June 2024.

Concurrently with the publishing of CP 24/8, the FCA has published FG 24/3 Finalised non-handbook guidance on the Anti-Greenwashing Rule.  This rule, which applies to all FCA authorised firms, was included as part of the package of measures in PS 23/16 and comes into force from 31 May 2024.  The FCA's Guidance is designed to help firms understand and implement the anti-greenwashing rule.  

A press release, Consultation Paper (CP24/8) and are the guidance on the anti-greenwashing rule (FG24/3) are available on the FCA website.