In an open letter to fund managers, the UK FCA has said too many ESG fund applications are of poor quality.
The letter, by Nick Miller, Head of Asset Management Supervision at the FCA, says that too many of the high volume of applications for authorisation of sustainable funds the FCA receives are poor-quality and fall below their expectations. He says the FCA has developed a set of guiding principles to help funds apply the FCA’s existing rules. These are designed to ensure that any ESG-related claims are clear and not misleading. Miller says that in general, fund applications in this area often do not contain sufficient, clear information explaining their chosen strategy and how this relates to the assets selected for the fund.
The aim of the guiding principles is to help funds comply with existing requirements by ensuring that fund disclosures accurately reflect the nature of the fund’s responsible or sustainable investment strategy in both the pre-contractual documentation and on an ongoing basis.