On April 23, 2024, the UK Financial Conduct Authority (FCA) issued a Consultation Paper CP24/8, proposing the expansion of the Sustainability Disclosure Requirements (SDR) to cover Portfolio Management next to the already in scope Asset managers.
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On April 23, 2024, the UK Financial Conduct Authority (FCA) issued a Consultation Paper CP24/8, proposing the expansion of the Sustainability Disclosure Requirements (SDR) to cover Portfolio Management next to the already in scope Asset managers. For more details on the CP24/8, please refer to the FCA website.
As a reminder, the FCA published the final version of the SDR and investment labels on November 28, 2023, which only apply to asset managers.
Key points from the consultation paper:
- The FCA suggests expanding the SDR and labeling regime to include various portfolio management services, such as model, customized and bespoke portfolios, for both discretionary and advisory services in private markets.
- The definition of portfolio management aligns with the FCA’s TCFD-aligned disclosure rules.
- The FCA proposes that the requirements apply to portfolio management conducted from a UK-based establishment of the portfolio manager.
- Disclosures are mandatory for retail investors but optional for professional clients, and the scope does not cover services for overseas clients.
- The FCA has revised the sustainable investment label threshold for portfolio managers from 90% to 70%, aligning with criteria for funds and reflecting the diversified nature of portfolios.
- Portfolio management firms are expected to have the same disclosure obligations as fund managers, including consumer-facing, pre-contractual, and ongoing disclosures for labeled services or those using sustainability-related terms.
Suggested implementation timeline
- December 2, 2024: The FCA suggests that the labelling regime, along with the naming and marketing rules and related disclosures, be implemented for portfolio managers by December 2nd, 2024.
- December 2, 2025: The FCA proposes to align the remaining implementation dates with those for funds: ongoing product-level disclosures and entity-level disclosures for the largest firms from December 2, 2025
- December 2, 2026: entity-level disclosures for smaller firms with over £5 billion of assets under management (AUM)
Next steps
- June 14, 2024: The FCA invites industry participants to comment on Consultation Paper CP24/8 by June 14, 2024.
- Second half of 2024: publication of the final SDR Requirements for Portfolio managers
cleversoft Services
Based on the FCA´s requirements, cleversoft is developing a Standard SDR service that will complement our existing SFDR Service. The new offering will provide comprehensive compliance services for the evolving regulatory landscape.
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