The latest compliance news: regulatory developments, punishments, guidance, permissions, new product and service offerings.

FINMA, Alpadis
Alpadis Trust (Switzerland), which provides fiduciary and wealth planning services, has won a trustee licence from the Swiss Financial Market Supervisory Authority, aka FINMA. 

“The granting of the FINMA Trustee licence is a validation of our rigorous standards and dedication to client service,” Alain Esseiva, CEO of Alpadis Group, said.

“This recognition by FINMA not only consolidates our position in the market but also reinforces the trust our clients place in us. It is a commitment to our clients that we operate with the highest level of professionalism and compliance.”

As this news service has reported, FINMA has shaken up Switzerland’s external asset management/trusts sector by introducing new requirements on these organisations. 

“Alpadis Group views the acquisition of the FINMA Trustee licence as a pivotal advancement not only for the company but also for the entire Swiss trust industry. This development reflects a deep-seated commitment to uphold the integrity and standing of Switzerland as a leading global financial hub,” the firm said.

This news service also operates an annual awards programme for Swiss EAMs. To find out more and get involved, click here. To see another story about granting a FINMA licence (to an asset manager), click here. As of 31 July 2022, a total of 1,535 institutions were applying for licences or had already completed their applications. From notifications received in 2020, 130 institutions had, however, told FINMA that they would not be applying for a licence under the new system.

Financial Conduct Authority
The UK’s Financial Conduct Authority said it has confirmed measures to stamp out greenwashing and bolster trust in ESG investing. The move comes after controversies over misleading advertisements, for example.

The stakes for avoiding problems are large because there is estimated to be $18.4 trillion of ESG-orientated assets being managed globally, the FCA said in a statement this week.

The regulator said it is putting in place new sustainability disclosure requirements and an investment labels regime.

The FCA said research shows that investors were not confident that sustainability-related claims made about investments were genuine. This isn’t helped by a lack of consistency when firms use terms, such as "green", "ESG" or "sustainable".

Surging energy costs and the political controversies associated with Net Zero policies – such as banning sales of new internal combustion engine cars by a given date – have meant that the ESG phenomenon has arguably faced more headwinds, particularly since the Russian invasion of Ukraine in February 2024. There have also been concerns about investment firms and banks wrapping their products in “green” clothes to drive sales.

The FCA will introduce the following measures:

-- It will bring in an “anti-greenwashing rule” for all authorised firms to make sure sustainability-related claims are “fair, clear and not misleading”; 
-- product labels to help investors understand what their money is being used for, based on clear sustainability goals and criteria; and 
-- naming and marketing requirements so that products cannot be described as having a positive impact on sustainability when they don’t.

Labels
The FCA has established four new fund labels: Sustainability Impact, Sustainability Focus, Sustainability Improvers and Sustainability Mixed Goals.

The new categories close fund labelling loopholes that have "left current reporting requirements open to manipulation and abuse by fund management companies,” Seb Beloe, partner and head of research at WHEB Asset Management, said. 

"As a member of the Disclosure and Labels Advisory Group, we have seen first hand the FCA’s commitment to stamping out greenwashing, and we would urge the FCA and other regulators to go further in encouraging transparency in other areas of fund management. For example, moving beyond published Top 10 Holdings on fund factsheets to give a deeper and clearer picture of a fund’s underlying investments.

"That said, we are pleased that the FCA is considering extending these sustainability disclosure requirements – including to pension funds and other investment products – and that the critical role of financial advisors is acknowledged, with a new independent working group set up to respond to their unique role and challenges in advising on sustainable finance.

"We fervently believe the seismic shift away from a carbon-intensive economy to a net-zero economy represents a colossal opportunity for investors. Capital markets have an essential role to play in scaling new industries and adapting existing ones. Greenwashing does a disservice to individual investors, companies, financiers and society,” Beloe said. 

Iona Silverman, partner and a greenwashing lawyer at law firm Freeths, said the FCA’s proposals were "overdue and scant on detail."

"Both financial advisors and consumers alike need transparency to enable informed decision-making when investing. The Competitions and Markets Authority (CMA) and Advertising Standards Authority (ASA) are much further advanced in their regulation of greenwashing in consumer-facing advertising, with the CMA’s Green Claims Code and the ASA’s frequent rulings on what constitutes misleading 'green' advertising," Silverman added.