The Financial Conduct Authority has warned advisers they will be asked to step up on sustainable investing, with details on its plans to be published "in the coming months".
Yasmin Raza, the regulator's manager of ESG market intelligence & engagement, told advisers today (October 3) their role in the promotion of sustainable investing and how the FCA could support them was a "live discussion" at Stratford HQ, and they could expect to "hear more from us in the coming months".
It comes as she confirmed the regulator's SDR rules, which govern how sustainable funds are labeled and promoted, will be published in the fourth quarter of this year, having suffered delays due to the sheer number of industry responses.
Speaking at UKSif's good money conference Raza said: "We know that many investors want to invest in ESG and sustainability funds but might struggle to actually understand the technical terms and the different types of responsible investment strategies.
"And that's where financial advisers can play a really vital role in helping investors navigate the market.
"So as we're laying the pathway for SDR, we also want to see the advice community stepping up to support consumers to engage with and understand their options.
"And it's a very live discussion within the building at the FCA at the moment in terms of how to support that but I can kind of tell you today that you will hear more from us in the coming months."
Raza said the FCA's work on ESG and its new consumer duty were "really aligned" and essentially "SDR is about placing consumer needs at the very core of the regime".
The FCA expects the net zero economy to "look very different" from the current economy, with "unprecedented capital reallocation and disruptive changes".
With this in mind the regulator expects firms to focus on delivering good consumer outcomes, "and not just to focus on ticking boxes".
'A rounded understanding'
Since last year the FCA has been consulting on its SDR regime, which will set out how sustainable funds must be labelled, the disclosure requirements on asset managers and bring in new rules to combat greenwashing.
The FCA will expect that products that are promoted as being ethical, socially responsible, green or similar, will be genuinely designed to run as such, and match up with any promises or claims made in those promotions.
Raza confirmed the new rules would be published before the end of this year, with some time given for implementation thereafter.
She said the process had suffered delays due to the sheer number of responses - more than 240 - which, she said, the regulator was very grateful for.
"We know that we can't go it alone, it's quite a complicated regime and we really need to be talking to market about how best to go about this.
"So combining the kind of vast number of consultation responses I talked about, the consumer level engagement, and industry expert engagement, we do now feel that we are equipped with quite a rounded understanding of how industry can matchmake their clients with appropriate products to deliver good outcomes."
She emphasised the FCA's work had involved a lot of testing with consumers. It had interviewed more than 15,000 consumers, saying "hopefully it shows you that we've done our homework to try and understand what people feel they actually need".
She said feedback had been "a mixed bag" but broadly supportive. It had included views on the practical challenges of implementation and the proposed naming and marketing restrictions for non labelled products, as well as how the regime might work for multi-asset and blended strategies.
"We've heard a lot and we're reflecting," Raza assured delegates, adding the regulator had been working with its overseas counterparts to ensure regimes were aligned internationally.
She concluded: "There's clearly a lot for us to deliver in the year ahead both at the FCA and within industry.
"I'm personally confident that we're developing a really solid platform from which to increase trust, transparency, consistency and ultimately better consumer outcomes."
carmen.reichman@ft.com
