FCA provides a limited extension to compliance with the SDR naming and marketing regime

Under the FCA's sustainability disclosure requirements ("SDRs"), firms are required to comply with the naming and marketing regime by 2 December 2024. This includes a restriction on the use of the terms 'sustainable', 'sustainability' and 'impact' in a product's name, which means they can only be used by products with an investment label. Therefore, in relation to any existing products which use these restricted terms in their name, firms have to make a decision on whether to use an investment label and comply with the associated labelling criteria or change the product's name to stop using these terms.

In a statement made on 9 September 2024 (available here), the FCA noted that it has seen "a strong pipeline of fund applications from firms wishing to use the labels" and that it has become clear that firms wishing to use an investment label, or which need to change the names of their products, need more time to meet the investment labelling criteria and prepare the pre-contractual disclosures which require FCA approval.

Taking the above into account, the FCA has provided a limited time extension until 5pm on 2 April 2025 for firms seeking to use an investment label or change the name of their product to remove one or more of the restricted terms, where the firm has submitted a completed application to the FCA for approval of the amended disclosures of that product by 5pm on 1 October 2024. Therefore, provided a manager has submitted the proposed disclosure amendments for a product to the FCA by this date, this provides them with some breathing room which is particularly helpful to the extent that the proposed disclosure amendments also require approval from unitholders or prior notification to unitholders. However, the FCA has noted that where firms can comply with the rules without requiring this flexibility they should do so or for those requiring an extension, they should comply with the rules as soon as they can.

Firms should also note that the rest of the SDR naming and marketing regime continues to apply from 2 December 2024, both in relation to marketing products which do not use sustainability-related terms in their names but do in their marketing materials and those which use sustainability-related terms in their names other than the restricted terms set out above. Firms must also continue to comply with the anti-greenwashing rule, which applied from 31 May 2024.