FCA CP26/17 Proposes Climate Disclosure Simplification, Cryptoasset Fee and Fund Changes in Quarterl

Key Takeaways

• The FCA's 52nd quarterly consultation paper proposes miscellaneous Handbook amendments, the most significant being a simplification of product-level climate disclosure rules for asset managers, life insurers and pension providers following a post-implementation review.
• It also covers cryptoasset fee tariffs, authorized fund exposure to cryptoasset exchange traded notes (cETNs), cryptoasset financial promotion approver notifications, and UK CRR consequential changes.
• The consultation has closed, so compliance teams should now prepare for the forthcoming feedback and final rules.

Deep Dive

The FCA's 52nd quarterly consultation paper proposes miscellaneous Handbook amendments, the most significant being a simplification of product-level climate disclosure rules for asset managers, life insurers and pension providers following a post-implementation review. It also covers cryptoasset fee tariffs, authorized fund exposure to cryptoasset exchange traded notes (cETNs), cryptoasset financial promotion approver notifications, and UK CRR consequential changes. The consultation has closed, so compliance teams should now prepare for the forthcoming feedback and final rules.

Although the FCA describes these quarterly proposals as minor, several have operational consequences. The most substantive item amends the product-level disclosure requirements in ESG, with consequential changes elsewhere in the Handbook, following a post-implementation review of the climate disclosure rules introduced under PS21/24. The FCA states the aim is to simplify the rules while preserving the original policy intention. Affected firms are asset managers, life insurers and FCA-regulated pension providers.

The FCA proposes amending FEES 4 Annexes 1A, 2A, 11A and 13 to use regulated income as the tariff base for cryptoasset firms, and adding 3 rows to FEES 5 Annex 1R for new regulated cryptoasset activities. This affects fee calculations and budgeting for firms entering the regime. Certain authorized funds would be permitted to hold cETNs up to 10% of scheme property, which widens investment options but raises portfolio, valuation and risk-management considerations. The FCA also proposes removing the requirement for approvers of qualifying cryptoasset financial promotions to submit notifications after certain approvals, citing data showing most promotions comply with the rules. This reduces reporting burden, but approvers' underlying quality controls remain essential.

Consequential changes update Handbook and Glossary references to UK CRR definitions and provisions, reflecting HM Treasury's approach to revoking UK CRR provisions under FSMA 2023. The FCA also proposes simplifying the scheduling rule for RMA-M and updating the guidance for completing FIN073, which will matter to mortgage and general insurance intermediaries.

The consultation has closed. The FCA will publish feedback in a Handbook Notice after reviewing responses; no implementation dates are specified. Compliance teams should: (1) map affected business lines to each proposal; (2) assess how simplified ESG disclosures would change current climate reporting processes and avoid rework on existing builds; (3) have crypto-active firms model the fee impact of the regulated income tariff base; (4) review fund investment policies and risk frameworks if considering cETN exposure; (5) track the Handbook Notice and final instruments.

Overall impact is low to moderate. Main risks are misreading the final rules, inconsistent disclosure during the transition, fee budgeting errors, and weakened controls where notification requirements are removed. The simplification of climate disclosures should lower compliance cost, but firms must still avoid greenwashing exposure under existing anti-greenwashing and consumer-protection obligations.

Source: Financial Conduct Authority