The Financial Conduct Authority could provide more clarity on its proposed anti-greenwashing rules, according to one trade body.
In its response to the FCA’s consultation, seen by FT Adviser, Pimfa said the current guidance does not fully clarify the anti-greenwashing rule.
Pimfa said more examples in the guidance could reduce the regulatory burden on firms.
However, it said it considered the guidance on the anti-greenwashing rule to be “broadly helpful” with its implementation.
The response, dated January 26, said: “The guidance does not fully address the complexities associated with sustainability and the range of claims that can be found in marketing frameworks and financial promotions.
“We support the anti-greenwashing rule’s intention to ensure that sustainability-related claims firms make about their products and services are fair, clear and not misleading, and consistent with the sustainability characteristics of those products or services.
“However, the practical implications of applying the rule are broad and reach beyond those parts of the firm’s business that are directly involved in sustainable investing.”
It asked for particular clarity on what exactly will be covered by the rules, and examples of what firm’s communications would have to be looked at.
“We do not believe that the guidance contains sufficient examples of technical language that can be used in marketing materials or examples of how technical terms may be translated in communications aimed at retail audiences or retail versus business to business type scenarios,” said Pimfa.
“Providing examples of terms that firms may struggle with and how to use different terms would be helpful to firms as well to aid consumer understanding.”
Pimfa also asked the FCA for more information on the application of the rule to products like model portfolio services and whether it will be updated when SDR is rolled out.
The final question on the consultation was whether the guidance should come into force on May 31 this year.
Pimfa said: “Whilst we are supportive of the implementation date of the anti-greenwashing rule coming in before the disclosures and labelling regime, we would like the FCA to be cognisant of a need for wide-ranging retrospective work to ensure disclosures remain aligned and that this, in turn, will create greater administrative burden and cost for firms to ensure compliance.”
The regulator’s consultation on the guidance closed on January 26.
The rules would apply to FCA-authorised funds and would require any reference to sustainability characteristics to be “fair, clear and not misleading”.
It will apply to all communications about financial products or services which refer to environmental or social features and includes, but is not limited to, statements, assertions, strategies, targets, policies, information, and images.
The FCA was approached for comment.
tara.o'connor@ft.com
