Where a product has no label, this will indicate it invests in assets that do not meet the criteria for a sustainable classification.
New information requirements under the proposed sustainable investment regime should make it easier for advisers and investors to easily access better quality product-level disclosures on the key sustainability related features of a product, and new rules will restrict the use of certain sustainability-related terms in product names and marketing material unless the product satisfies the requirement to use a label.
We know the current rules and guidance in this area are vague in terms of the level of detail advisers are expected to go to when discussing sustainable investment strategies.
We expect the implementation of the new label regime and the new consultation on how best to take sustainability matters into account and understand investors’ preferences on sustainability when giving advice will provide increased clarity to intermediary firms.
The great thing about consultation papers is that they offer industry firms of all types a chance to have a voice and convey our beliefs.
We will be doing so, and we would encourage anyone reading who has views on regulatory change to also speak up through these consultation processes.
The FCA certainly likes to publish plenty of content; it is important we use our opportunities to give the regulator some back in return.
Retirement income review
In terms of upcoming reviews, at the end of the year we expect a thematic publication on retirement income advice and lifetime mortgages, which should provide practical insight into how the FCA views the current outcomes being received by consumers in later life.
Many firms will have received and completed a sizeable data request from the FCA on the topic this summer.
We expect the FCA will publish the findings of this data collection as part of its review, which will provide insight into what is viewed as best practice when seeking to deliver good outcomes in this space.
Appointed representative regime
Something that only applies to a minority of the adviser community, but will be hugely important to those who are affected, is the strengthening of the rules in relation to the appointed representative regime.
This includes the principal firm completing an annual review of each appointed representative, the first of which is due by November this year.
Some areas in which we expect particular scrutiny are the effectiveness and robustness of the AR firm’s internal systems, controls, procedures and reporting to the principal firm.
In turn, the principal firm will also need to self-assess that it has the resource, knowledge and experience to effectively supervise the activities of its AR firms effectively, appropriately and in line with the standards expected by the FCA.
