The Financial Conduct Authority (FCA) is delaying the implementation of its Sustainable Disclosure Regulation (SDR) and easing the rules around which funds can be labelled sustainable.
Following feedback on its consultation, which closed at the end of January, the UK regulator said it would push back the policy changes from Q2 to Q3 this year and refine the criteria of the products that can qualify for a label.
The rules, designed to combat greenwashing, have garnered “broad support” from the industry but questions have been raised about the breadth of their scope.
Responding to the consultation, the Investment Association (IA) said most ETFs would find it “very difficult” to meet the labelling criteria under SDR due to the product’s limited escalation policies.
Outlining the next steps, the FCA said: “We are 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.”
It added there will be a place for all in-scope products within the overall package of measures and that it was important for consumers to be able to navigate the labelling regime effectively.
Gemma Woodward, head of responsible investing at Quilter Cheviot, said: “Given the complexity of the topic and the scale of the response from the industry, it is good to see the FCA take its time with its policy statement on the SDR.
“Much of the discussions around SDR have been seen entirely through the lens of a single strategy fund, with other products being ignored. For example, managed portfolio services would not be able to get a label and therefore you are actually disadvantaging investors who invest in products more suited to those with fewer assets.”
The measures are part of a broad crackdown on greenwashing by the UK regulator. Last week, the FCA published its review of ESG benchmarks finding “potential widespread failings”.