FCA plans to introduce ESG rules for advisers

The FCA has announced plans to introduce "specific sustainability-related requirements" for advisers as part of its new ESG strategy.

Related topics:  Regulation   |   Rozi Jones
|
3rd November 2021
FCA new
"Developing consistent, trusted standards are a vital part of that, giving investors the confidence to put their money where it can deliver the most sustainable outcome."

The regulator has published a new Discussion Paper to coincide with COP26 Finance Day, inviting views on potential criteria to classify and label investment products. As part of the Paper, the FCA says it is "exploring the best approach to introducing requirements for financial advisers" in due course.

The FCA said it recognises "the important role that financial advisers play in providing consumers with sufficient information to assess which products meet their needs".

Building on existing rules, a key aim will be to confirm that advisers "should take sustainability matters into account in their investment advice and understand investors’ preferences on sustainability to ensure their advice is suitable".

In its Discussion Paper, the FCA said: "We acknowledge that the EU has taken this approach in introducing suitability requirements for different types of financial market participants. However, these were not onshored in the UK prior to the UK’s withdrawal from the EU. We welcome any views on this approach and any particular considerations that we would need to take account of in our proposals.

"We will develop proposals on this in due course, working with Government."

Nikhil Rathi, chief executive of the FCA, commented: 'It is vital that we innovate to support industry’s shift to a more sustainable future. That is why the FCA has been leading from the front. Developing consistent, trusted standards are a vital part of that, giving investors the confidence to put their money where it can deliver the most sustainable outcome.

'The strategy we have published today puts these standards front and centre, supported by supervision and enforcement where firms fail to meet them.'

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