UK: SDR Naming and Marketing Rules in Force, and FCA updates its pre-contractual disclosure examples

With the FCA's SDR Naming and Marketing rules having become applicable on 2 December, the FCA has updated its guidance page on the SDR & Labelling regime with further illustrative examples of how applicants can meet the pre-contractual disclosure requirements.   

With the new rules having entered force, this means that firms must ensure that where no sustainability label is used, but sustainability related terms are used in a fund's name:

• strict naming rules are met;
• a brief statement that the product does not have a sustainability label and why is prominently displayed; and
• consumer-facing disclosure (where relevant), pre contractual disclosure and ongoing product disclosure requirements are also complied with.

Of course some firms with funds currently using one or more of the terms ‘sustainable’, ‘sustainability’ or ‘impact’ (or a variation of those terms) in the name of that fund (intending either to use a label, or to change the name of that fund) will have availed themselves of the FCA's limited temporary flexibility meaning that, provided that a completed application was submitted to the FCA before the 1 October deadline,  those firms have until 5pm on 2 April 2025 to comply with the naming and marketing rules in respect of the relevant funds.  Firms are reminded that the FCA expects them to comply with the rules as soon as they can, without waiting until 2 April 2025 (see our blog post).

On pre-contractual disclosures, the FCA had originally updated its Sustainability disclosure and labelling regime webpage to include a document providing non-exhaustive illustrative examples across a selection of labels to showcase how applicants can meet the pre-contractual disclosure requirements. The examples are based on the FCA’s experience of applications to date with a view to aiding firms as they prepare their own documentation. The FCA has now added to this guidance document further illustrative examples across the Improver category. They have also included examples for Mixed-Goal labels.

You can find the FCA's guidance on Pre-Contractual Disclosures here, and the FCA's SDR and labelling regime webpage here.