The FCA says that it could save investment firms £20m a year under its new proposals to simplify and streamline climate reporting.
The FCA plans to replace detailed product-level reports - based on the Task Force on Climate-related Financial Disclosures (TCFD) - with simpler, more targeted information for retail investors, in line with the Consumer Duty.
TCFD product reporting was added in 2021 as part of the UK’s approach to climate disclosures.
The proposed changes would give give investors clearer insight into how climate risks – such as floods, storms and other extreme weather events – could affect investment performance, while reducing unnecessary costs to firms, the regulator said.
Michelle Beck, director of wholesale buy-side at the FCA, said: “As part of being a smarter, more proportionate regulator, we’re cutting complexity in our rules for asset managers, while keeping the focus on clear, useful information for investors. These proposals will make it easier for firms to communicate with their customers in ways that genuinely inform and engage them.”
The proposals follow a review of how the current rules are working and are also part of a larger FCA drive to cut red tape.
The FCA said it found that while the rules have improved firms’ awareness of climate risks, product-level reports are often seen as too complex by investors and not widely used. The FCA is seeking views from asset managers, asset owners, trade bodies, and consumer groups to make sure the proposed rules, "work in practice and support growth."
• The consultation is open until 13 July and the FCA aim to finalise and implement the rule change later this year.