CP24/8: Extending the SDR regime to Portfolio Management

Read CP24/8 (PDF)[1]

Why we are consulting 

We want to help consumers, including those who use portfolio management services, to navigate the sustainable investment market by extending the SDR and labelling package to portfolio management.  

We consulted on including portfolio management in our earlier consultation, CP22/20[2]. We received detailed, supportive feedback from the consultation and our recent engagement, which has helped us refine our proposals for this sector.

We are proposing to apply a broadly similar approach to labelling for portfolio managers as introduced for fund managers, to have a consistent approach and create a level playing field.

Who should respond

This consultation applies to:  

• firms providing portfolio management services

April 2025 Update

In February 2025, we announced that we no longer intend to publish a Policy Statement in Q2 2025. This is because we want to ensure that the SDR regime for portfolio managers protects consumers, whilst considering the practical challenges firms may have in adopting the regime. 

We have reflected on the feedback we received via written responses and stakeholder engagement, building on earlier feedback to CP22/20[2]. In determining our next steps, we have also taken into account wider regulatory work affecting portfolio managers.

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

This update outlines a summary of the key feedback we received to CP24/8[1], the relevance of our forthcoming multi-firm review on model portfolio services, and the next steps for this work.

Key feedback to CP24/8

• Scope: We proposed to apply the regime to different types of portfolio management, including model, custom and bespoke portfolios. We received feedback on the application of the rules to bespoke portfolios given the challenges raised, and how the rules should apply to agent-as-client models where the adviser acts as a professional client of the portfolio manager.
• Implementation timelines: We proposed that the regime would come into force for portfolio managers by 2 December 2024. Respondents called for more time to make the necessary changes, for the regime for UK funds to bed in and for greater clarity on the extension of SDR to funds in the Overseas Funds Regime.
• Labelling portfolios: We proposed that a portfolio could use a label where portfolio managers determine that it meets certain qualifying criteria. We received feedback on how labelling criteria would work in practice for portfolio managers, given their different roles and responsibilities, resourcing, and types of products/services offered compared to asset managers.  
• Naming and marketing: We proposed that portfolio management offerings to retail investors are subject to the naming and marketing rules. We received broadly supportive feedback on these proposals but there were calls for clarity on how they apply to different types of portfolios and client relationships, in line with the feedback received on scope.
• Disclosures: We proposed a tiered approach to disclosures, including consumer-facing, product-level, and entity-level reports as applicable. We received broadly supportive feedback for these proposals but there were calls for clarity on practical considerations and how they interact with other sustainability reporting requirements.

We thank all respondents for their constructive and detailed feedback.

Next steps

In light of this feedback, we have decided that it is not the right time to finalise rules on extending SDR to portfolio management. We intend to prioritise the forthcoming multi-firm review into model portfolio services (as announced in the Asset Management & Alternatives portfolio letter[3]). The review will focus more broadly on how firms are applying the Consumer Duty to provide confidence that investors are receiving good outcomes from model portfolio services.  

We remind firms of their obligation to comply with the anti-greenwashing rule, which came into effect on 31 May 2024. 

Background

This consultation follows our Consultation Paper[3] (CP22/20) and corresponding Policy Statement[3] (PS23/16) on Sustainability Disclosure Requirements and investment labels, which introduced a package of measures for fund managers.