The Financial Conduct Authority (FCA) has published consultation proposals for a new regulatory regime for environmental, social and governance (ESG) ratings providers to make ratings more transparent, reliable and comparable. The FCA estimates the proposals would deliver around GBP 500m in net benefits over the next decade, following the UK government’s decision to bring ESG ratings within the FCA’s remit. The draft rules focus on four areas: increased transparency to enable easier comparison for users and those being rated; stronger governance, systems and controls to support oversight and quality assurance; identification and management of conflicts of interest; and clearer expectations for stakeholder engagement and complaints handling. The package also sets out how existing FCA rules would apply to newly in-scope firms, with requirements designed to be proportionate to business size and risk, and draws on a voluntary industry code of conduct and International Organization of Securities Commissions (IOSCO) recommendations. The consultation is open until 31 March 2026. Final rules are expected in Q4 2026, with the new regime planned to come into effect from June 2028, and the FCA plans to support firms seeking authorisation as an ESG rating provider.
Financial Conduct Authority 2025-11-28
Financial Conduct Authority consults on regulating ESG ratings providers with estimated GBP 500m net benefits
The Financial Conduct Authority (FCA) proposes a new regulatory regime for environmental, social, and governance (ESG) ratings providers to enhance transparency, reliability, and comparability. The draft rules emphasize transparency, governance, conflict management, and stakeholder engagement, aligning with existing FCA rules and IOSCO recommendations. The FCA estimates the proposals could yield GBP 500 million in net benefits over the next decade.