UK FCA final policy statement on ESG ratings regime

The UK Financial Conduct Authority (FCA) has published a final policy statement (PS26/22) setting out its final rules and guidance for environmental, social and governance (ESG) rating providers. This follows the government's legislation to bring ESG ratings within the FCA's perimeter as well as the FCA's earlier consultation in December 2025. The FCA is proceeding largely as proposed, with targeted changes mainly to the transparency and stakeholder engagement proposals, intended to improve clarity and proportionality, and to support practical implementation.

The regime will take effect on 29 June 2028, from which date in-scope ESG rating providers will need to be FCA-authorised. Key features of the final regime are:

• Baseline standards: relevant FCA Handbook rules and guidance will apply, including the Threshold Conditions in COND, the Principles for Businesses in PRIN, relevant provisions in the Systems and Controls sourcebook, General Provisions and the Financial Crime Guide. The consumer duty will not apply.
• Transparency: there will be a tiered transparency framework comprising public disclosures and additional disclosures for direct users. Rated entities will receive the additional disclosures on request rather than by default. Certain disclosures can be made at product level rather than at individual-rating level.
• Governance and systems and controls: providers must keep records to explain and evidence how a rating was produced and how the outcome was determined, rather than to reproduce the rating. They must give users advance notice of material changes to methodologies but will not be required to give advance notice to rated entities.
• Conflicts of interest: firms must take all reasonable steps to prevent or manage conflicts of interest, with disclosure used only as a last resort where the conflict continues to pose a material risk to the integrity or independence of a rating.
• Stakeholder engagement and complaints: firms must notify rated entities sufficiently in advance and at least two business days before a rating is first made available. Firms must deal with complaints raised within three years. The UK Financial Ombudsman Service will not have jurisdiction and Financial Services Compensation Scheme cover will not apply.
• Senior Managers and Certification Regime (SMCR): ESG rating providers will be subject to the SMCR in the same category as Core firms, including conduct rules and fitness and propriety requirements.

The FCA also finalised perimeter guidance to clarify the scope of the regulated activity and relevant exclusions.

The authorisation gateway will open on 24 June 2027 and the FCA's pre-application support service will be available from February 2027. The FCA's directions set out when firms should apply for Part 4A permission, or a variation of permission. Larger firms should apply between 24 June 2027 and 29 July 2027. A larger firm is one that forecasts, in its application, revenue of GBP500,000 or more from providing ESG ratings in the 12 months after the day of submission. All other firms should apply between 30 July 2027 and 31 August 2027. The FCA also published a new webpage with information to help firms prepare for the new regime.

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