ESG rating providers operating in the UK face a new compliance reality, as the FCA has finalised rules that place these firms under its supervision for the first time and require them to seek authorisation from 24 June 2027.

The regime targets firms and organisations that produce ESG ratings and assessments, a segment that carries significant weight in how investment decisions are made. The FCA intends the rules to make ratings clearer, more dependable and easier to compare, strengthening trust in the data that investors draw upon.

To help businesses determine whether their activities fall within the scope of the regime, the regulator has also issued accompanying guidance.

Under the framework, providers will need to meet obligations spanning transparency, governance, systems and controls, and the handling of conflicts of interest.

Firms will also be expected to engage with both the users of their ratings and the entities they rate. The FCA has stated that requirements will scale according to a firm’s size and the nature of its activities, and that the design draws on existing and international standards.

The regulator is urging potentially affected firms to begin their preparations without delay. Recommended steps include assessing whether the framework applies to their work, reviewing the final rules and guidance, considering whether authorisation is required, preparing for implementation and making early contact with the FCA’s support services.

To assist with readiness, the FCA plans to run webinars and offer access to its Pre-Application Support Service.

FCA director of authorisations and sustainable finance Laura Dawes said, ‘Trusted information is essential for well-functioning markets.

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