FCA updates on SDR and investment labels consultation

The FCA has received a significant response (around 240 written responses) to CP22/20, its consultation paper on sustainability disclosure requirements and investment labels.  In order to take account of this significant response, it now intends to publish its Policy Statement in Q3 this year (previously expected in Q2), and the proposed effective dates of the rules will be adjusted accordingly. [Postscript: In July 2023, the FCA published an update on its Regulatory Initiative Grid stating that the publication of the policy statement has now been pushed back to Q4 2023.]

The FCA reports that there is broad support for the proposed regime and outcomes it is seeking to achieve, and it welcomes the rich, constructive feedback it has seen on some of the detail.

Key points to note:

• The FCA is carefully considering the feedback to ensure that first and foremost the regime protects consumers but also recognises and takes account of any practical challenges that firms may have. "This includes, but is not limited to, considering our approach to the marketing restrictions, refining some of the specific criteria for the labels and clarifying how different products, asset classes and strategies can qualify for a label, including multi-asset and blended strategies"
• The Policy statement will also clarify matters such as that primary and secondary channels for achieving sustainability outcomes are not prescribed, and that the FCA do not require independent verification of product categorisation to qualify for a label.
• There will be a place for all in-scope products within the overall package of measures. The FCA agree it is important that consumers can navigate to those products that meet their needs and preferences. This includes products that may not qualify for a label, but nevertheless have some sustainability-related characteristics.
• International cohesion with other regimes is in the mind of the regulator as it develops its policy.