• Regulatory Delay: FCA halts plan to extend Sustainability Disclosure Requirements (SDR) to portfolio managers, despite strong industry backing.
• Operational Concerns: Feedback highlights complexity in applying rules to diverse portfolio types and alignment with other reporting regimes.
• Market Clarity Needed: The FCA seeks more time to address compliance challenges and ensure readiness across the sector.

The UK’s Financial Conduct Authority (FCA) has paused its plan to broaden its Sustainability Disclosure Requirements (SDR) and sustainable investment labelling regime to include portfolio managers. This decision comes despite “broad support” from industry stakeholders.

The proposed extension, announced in April 2024, aimed to bring wealth management services and retail model portfolios under the SDR umbrella. It would have followed the FCA’s initial SDR framework released in November 2023, which introduced anti-greenwashing rules and sustainability-related fund labelling requirements for asset managers.

Following its consultation process, the FCA disclosed in February 2025 that it would delay publishing a final Policy Statement. In its latest update, the regulator confirmed it has “decided that it is not the right time to finalise rules on extending SDR to portfolio management.”

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“Overall, there is broad support for extending SDR to portfolio management, with most respondents agreeing this is an important step toward improving consumer outcomes,” the FCA stated. “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.“

Industry feedback raised significant concerns around the feasibility of implementation. Respondents cited the need for:

• Additional time to meet compliance demands,
• Greater clarity on how naming conventions apply to different portfolio types and client structures,
• Clearer interaction with existing sustainability disclosure obligations,
• And practical guidance on how the new labelling system would function in portfolio management settings.

The FCA’s decision signals a cautious approach, prioritizing industry readiness and regulatory coherence over swift implementation. Stakeholders now await further guidance and a revised timeline.

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