30 April 2025
If you are covering the FCA’s notice it will not apply SDR to portfolio management at this time, please find below a comment from Gemma Woodward, head of responsible investment at Quilter Cheviot:
“Extending the Sustainability Disclosure Requirements to portfolio management was always going to be a difficult task given the often-unique relationship between a client and their intermediary. Given the delays seen so far, it is pleasing to see that the FCA has listened to the industry and understood that there would have been a significant impact upon the wealth management sector.
“The FCA rightly set a high bar with SDR, but as a result we have seen the adoption of its labels take far longer than most would have expected. After initial confusion about what could and could not qualify, the fund industry is now responding but there is a lengthy backlog. Applying SDR to portfolio management at this stage, therefore, was clearly not an option.
“While it appears this move has been kicked down the road, it isn't clear whether it has been cancelled altogether. The FCA will be watching how SDR embeds within the asset management industry closely and what will need to be done to extend the regime. Wealth managers and financial advisers too should take note. Furthermore, the FCA has made it clear that the Consumer Duty will still play a role in ensuring customer understanding of what they are investing in, while the anti-greenwashing rule applies across the board so consideration still has to be made.
“What is needed now is clear communication from the FCA and wide engagement from the industry to ensure that any future change that can be implemented is done so with plenty of time and comprehensive understanding of what is expected.”
