On 29 April 2025, the FCA published a summary of the key feedback received to its Consultation Paper (CP24/8) on extending the Sustainability Disclosure Requirements and investment labels regime (the “SDRs”) to portfolio management.
In its summary, the FCA has stated that although there is broad support for extending the SDRs to portfolio management, it wants “to take its time” to ensure that portfolio managers are well-positioned to implement the regime when it is eventually extended. Therefore, the FCA has confirmed that it is delaying the publication of the policy statement to CP24/8 to an as-of-yet unknown date.
Background
The Policy Statement (PS23/16) containing the final rules and guidance on the SDRs was published in November 2023, and the SDRs (initially applying to certain types of funds) have come into effect in a phased manner since 31 May 2024 (which you can read more about here).
PS23/16 confirmed that the FCA would consult on extending the application of the SDRs to portfolio managers, and the FCA subsequently published CP24/8 on 23 April 2024. The FCA was initially expected to publish a policy statement to CP24/8 in Q2 2025, but on 14 February 2025, the FCA stated that it would delay publication of the policy statement and instead would “continue to reflect on the feedback received and provide further information in due course”.
Feedback summary
Despite the delay announcement, the FCA has now published a summary of the key feedback received to CP24/8, in which it confirmed that:
- Scope: it has received feedback on its proposal to extend the SDRs to cover different types of portfolio management, including bespoke portfolios, and as to how the SDRs should apply to agent-as-client models where the adviser acts as a professional client of the portfolio manager;
- Implementation timelines: respondents wanted the proposed implementation date of the extended SDRs (i.e. 2 December 2024) to be delayed;
- Labelling portfolios: it has received feedback on how the labelling criteria would work in practice, given the different roles and responsibilities, resourcing and types of products/services offered by portfolio managers compared to asset managers;
- Naming and marketing: it has received broadly positive feedback on making portfolio management offerings to retail investors subject to the naming and marketing rules, but respondents called for clarity on how they would apply to different types of portfolios and client relationships; and
- Disclosures: it has received broadly positive feedback on its proposals for a tiered approach to disclosures - including consumer-facing, product-level, and entity-level reports - but respondents called for clarity on practical considerations and how they would interact with other sustainability reporting requirements.
What next?
As a result of this feedback, the FCA has “decided that it is not the right time” to finalise extending the SDRs to portfolio management and that it instead intends to prioritise its multi-firm review into model portfolio services.
Although it is currently unclear when we can expect to see the publication of the policy statement to CP24/8, it seems the FCA intends to take it forward eventually, although not as a priority.
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