Where products are labelled, asset managers will also be required to produce a “clear, concise consumer-facing disclosure”, as well as for products that use sustainability-related terms without a label.
Meanwhile, distributors, including advisers, should prepare to make the labels and consumer-facing disclosures available to retail investors, according to the policy statement.
“The first thing I would want to check if I were an adviser is, are the pipes and plumbing in place to give me that document?” says Burnside.
“You’re likely to want to check on the conduit between the manufacturer and you, and say, ‘Are you ready to push this document through as and when it becomes available?’”
Gillian Hepburn, commercial director at Benchmark, the wealth management business that is part of Schroders, also highlights the importance of advisers engaging with asset managers, and asking for help and support on the upcoming SDR and labels regime.
“It’s a two-way process,” Hepburn says. “Equally, whilst the asset managers can be trying to work with advisers, it’s got to be two-way. I think advisers have got a real responsibility to say to their asset manager, ‘Can you help? Can you help give us the right training and education?’”
Advisers will also be required by the regime to include a notice on overseas products to clarify that they are not subject to the UK sustainable investment labelling and disclosure requirements.
At M&G for example, Burnside refers to its Luxembourg range that is sold into the UK, but not subject to the FCA’s upcoming regime.
Although not an obligation for product manufacturers, Burnside says: “One of the things that we are doing to try and help a bit, to the extent we can, is we’re going to put a one-liner into our UCITS KIIDs to make clear that it’s not a SDR fund.”
As well as this voluntary clarification, Burnside says the option for asset managers to label products at different times after July 31 will enable managers to learn from each other. “If a firm like ours adopts early, we will put out into the market, available to everybody, some SDR materials.
“So if you’re a UK-only firm that’s got no SFDR familiarity and that runs just UK money, you’re not having to run on the same timeline, and you can see some examples of how other people have done it.”
Chloe Cheung is a senior features writer at FT Adviser
