On 9 March 2023, the House of Commons’ Treasury Sub-Committee on Financial Services Regulations published a letter addressed to the FCA, following the FCA’s consultation on Sustainability Disclosure Requirements and investment labels.
The letter raises the following issues:
- Cost benefit analysis – The Sub-Committee is concerned that the FCA has failed to take into account the substantial costs to the consumer of the measures included within the consultation. It warns that without putting a figure on these costs, it is difficult for the Sub-Committee to take a view on whether the design of the proposals has been sufficiently considered.
- Enforcement against misleading customers – The Sub-Committee is concerned that despite stating in its consultation that consumers are being misled, and that it takes its fundamental principles seriously, the FCA appears unwilling to take enforcement action because no specific rules were in place when the misleading took place. It notes that misleading customers is a breach of an FCA principle and should therefore be a cause for enforcement.
- International divergence or convergence – The Sub-Committee asks the FCA to set out its assessment of the risks to consumers and to the funds industry if the FCA disclosure requirements prove to be too onerous for US or EU based funds to meet.
The Sub-Committee has asked the FCA for a response by 23 March 2023.