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In brief: Taking note of the FCA’s focus

The UK financial regulator is 'calling out' managers of retail funds on ESG claims.

The Financial Conduct Authority, the UK’s financial regulator, has sent a letter to managers of ESG-labelled retail funds warning of “misleading” fund names. The FCA does not have private funds in its sights, but “there is nothing to stop a manager of a private fund taking the principles into consideration, if they choose to do so”, a spokesperson said.

The letter calls for more consistency and accuracy in fund applications and the marketing of “sustainable” or “ESG” retail funds. Accompanying the letter are three guiding principles for fund managers to comply with disclosure and accuracy requirements. The FCA’s asset management head, Nick Miller, wrote: “We want firms to communicate clearly and avoid making misleading claims, both at the time of the application and on an ongoing basis.”

Authorised Fund Managers” are authorised by the FCA for listed, retail investment funds established in the UK.

The US Securities and Exchange Commission issued a risk alert in April calling on fund managers making ESG claims to “do what you say you’re going to do”.