Draft Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025 published

The draft Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025 has been laid before UK Parliament and published alongside a draft explanatory memorandum. The draft Order seeks to bring the provision of environmental, social or governance (ESG) ratings within scope of regulation under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO), making it a specified activity where such ratings are likely to influence decisions to invest in instruments listed in Part 3 of the RAO. This will require providers of an ESG rating to be authorised and supervised by the UK Financial Conduct Authority (FCA). Savings and transitional arrangements will apply, allowing firms to continue providing ESG ratings without authorisation, provided they submit an application for authorisation within a relevant application period to be specified by the FCA.

The transitional regime will expire one year after the main commencement date, unless extended by direction of the FCA in defined circumstances. Additionally, exemptions are specified for credit rating agencies and certain entities already authorised under the RAO, where ESG ratings are ancillary to their primary regulated activities. These are detailed in section 5 of the draft explanatory memorandum. The draft Order will come into force the day after it is made for limited purposes, including enabling the FCA to make rules and accept applications for authorisation. The full regulatory regime will apply from 29 June 2028 (the main commencement date), at which point the provision of ESG ratings will become a regulated activity. The FCA has also published a press release on the same day, confirming it will consult on proposed rules before the end of the year.

Return to main website.