The Financial Conduct Authority has launched anti-greenwashing guidance and wants to expand its sustainable investment labels framework.
The regulator is consulting on extending to portfolio managers the requirements on how sustainable investments are labelled and explained.
This will include model portfolios, customised portfolios and/or bespoke portfolio management services.
The FCA stated: "As the regime is focused on delivering outcomes for retail investors, the proposals are primarily aimed at wealth management services for individuals and model portfolios for retail investors.
"Firms offering portfolio management services to professional clients can opt into the labelling regime but will not be subject to the naming and marketing requirements and associated disclosures."
These rules are expected to be similar to the rules introduced for asset managers, finalised in November 2023, which aim to help consumers understand what their money is being used for as well as marketing requirements.
This is so products can only be described as having positive outcomes on the environment and/or society when those claims can be backed up.
Sacha Sadan, director of environmental, social and governance, FCA, said: "Consumers care about investing in products that have a positive impact on the planet and people. That’s why we want to boost the integrity of the market and ensure people can make informed decisions with their money."
The FCA also launched anti-greenwashing guidance ahead of rules coming into force on May 31.
The regulator received just 69 responses to consultation, from trade bodies, consumer groups and NGOs, on the guidance but said feedback was generally positive.
It said the rules are designed to protect consumers and require firms to ensure reference to sustainability is fair and not misleading.
Sadan said: “Confirming the new anti-greenwashing guidance and our proposals to extend the Sustainability Disclosure Requirements and investment labels regime are important milestones that maintain the UK’s place at the forefront of sustainable investment.”
The anti-greenwashing rules apply when a firm communicates with clients in the UK about a product or services or communicates a financial promotion.
Any claims made in relation to sustainability should be correct and capable of being substantiated, the guidance said.
The guidance read: “It is also important that firms regularly review their claims and any evidence that supports them, to ensure the evidence is still relevant for so long as those claims are being communicated.
“Firms should also ensure that their claims remain compliant with the anti‑greenwashing rule on an ongoing basis.”
tara.o'connor@ft.com
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