FCA delays SDR portfolio labelling work (for now)

The following has been published on the FCA’s website today  (29 April 2025) – reproduced here as shown on their site:

“April 2025 Update

In February 2025, we announced that we no longer intend to publish a Policy Statement in Q2 2025. This is because we want to ensure that the SDR regime for portfolio managers protects consumers, whilst considering the practical challenges firms may have in adopting the regime.

We have reflected on the feedback we received via written responses and stakeholder engagement, building on earlier feedback to CP22/20. In determining our next steps, we have also taken into account wider regulatory work affecting portfolio managers.

Overall, there is broad support for extending SDR to portfolio management, with most respondents agreeing this is an important step toward improving consumer outcomes. However, we want to take time to carefully consider the challenges and ensure that portfolio managers are positioned to implement the regime effectively before introducing requirements.

This update outlines a summary of the key feedback we received to CP24/8, the relevance of our forthcoming multi-firm review on model portfolio services, and the next steps for this work.”

Please see the FCA website for context and related relevant information.

Opinion:

The FCA pausing their work on extending SDR labels to portfolios is significant news for retail financial services companies because it is relevant to how this market is likely to evolve over time.

However, given what we know of this area, we agree with the need to delay.  We are therefore comfortable with this work being de-prioritised for now –  as much remains to be decided before this can work. Notably, we do know how (or when / if) SDR labelling will apply to offshore funds – which are important components of many portfolios, such as MPS’s.  We therefore await further information on what will happen next.

Note: there has been confusing media coverage on this subject over recent days. The FCA has confirmed to us on 30 April that this is not the end of the road for considering how sustainability labelling might be extended to investment portfolios. In other words, the statement above should be taken literally.

Intermediaries and portfolio managers should keep in mind that the ‘anti-greenwash’ apply to all regulated companies.