On 30 April 2025, the Financial Conduct Authority (FCA) updated its webpage for consultation paper CP24/8 on extending the Sustainability Disclosure Requirements (SDR) and investment labels regime to portfolio management.

Background

The FCA has previously published a consultation paper, CP22/20, and subsequent policy statement PS23/16 which introduced a package of measures relating to SDR and investment labels for fund managers. It then consulted last year, in CP24/8, on extending those measures to portfolio managers.

Update and feedback

In its update, the FCA explains that it has reflected on the feedback it received to CP24/8 and has also taken into account wider regulatory work affecting portfolio managers in deciding its next steps. It summarises the key feedback received, including in relation to:

  • Scope: Areas covered in the feedback included the application of the rules to bespoke portfolios given the challenges raised, and how the rules should apply to agent-as-client models where the adviser acts as a professional client of the portfolio manager.
  • Implementation timelines: Respondents called for more time to make the necessary changes, for the regime for UK funds to bed in and for greater clarity on the extension of SDR to funds in the Overseas Funds Regime.
  • Labelling portfolios: Feedback was received on how labelling criteria would work in practice for portfolio managers, given their different roles and responsibilities, resourcing, and types of products/services offered compared to asset managers.  
  • Naming and marketing: Respondents were broadly supportive of the proposal that portfolio management offerings to retail investors should be subject to the naming and marketing rules, but there were calls for clarity on how they apply to different types of portfolios and client relationships, in line with the feedback received on scope.
  • Disclosure: There was broad support for the FCA’s proposed tiered approach to disclosures, but there were calls for clarity on practical considerations and how they interact with other sustainability reporting requirements.

Next steps

While there is, overall, broad support for extending SDR to portfolio management, with most respondents agreeing it is an important step toward improving consumer outcomes, the FCA wants to take time to carefully consider the challenges and ensure that portfolio managers are positioned to implement the regime effectively before introducing requirements.

It has therefore decided that it is not the right time to finalise rules on extending SDR to portfolio management. Instead, it plans to prioritise the forthcoming multi-firm review into model portfolio services, which will focus more broadly on how firms are applying the Consumer Duty to provide confidence that investors are receiving good outcomes from model portfolio services. In the meantime, the FCA reminds firms of their obligations to comply with the anti-greenwashing rule, which came into effect on 31 May 2024.