Financial regulator urged to quantify cost to investors of its impending crackdown on the marketing of green investment funds
The country’s financial regulator has been asked to quantify the cost to investors of its impending crackdown on the marketing of green investment funds.
He was also asked to spell out what enforcement work he will undertake to identify investment firms guilty of “green laundering” – cynically labeling funds as green when they are not.
The demands, in a hard-hitting letter from the chairman of the Commons Treasury Select Committee to the head of the Financial Conduct Authority, follow an investigation by The Mail on Sunday into the consequences of the new FCA rules.
Seven days ago, using analysis conducted by wealth manager SCM Direct, we estimated that the FCA’s upheaval in the green investment fund industry could cost investors over £600m.
This bill will result in tens of thousands of investors withdrawing their money from green investments because the funds can no longer be labeled as such. In the letter to FCA boss Nikhil Rathi, TSC chairwoman Harriett Baldwin expressed concern that these transfer costs had not been included by the regulator in its tougher mobilization proposals. green funds.
Finger on the pulse: We’ve estimated that the FCA’s overhaul of the green investment fund industry sector could cost investors over £600m
She also asked for assurances that the regulator would seek redress from investors who had purchased misleading green products.
Alan Miller, co-founder of SCM Direct, praised the committee’s intervention. On Friday, he told the MoS: “It is a scandal that the FCA has failed in its legal obligation to conduct an analysis of the costs and benefits to investors of its proposed rules.”
“Baldwin’s letter also agrees with what we have been saying for years that the FCA’s enforcement function is broken resulting in no action against companies guilty of greenwashing.”
The FCA told the MoS it would “take appropriate, assertive and robust action” against perpetrators of greenwashing.
But he left two questions unanswered: the potential cost to consumers of his new rules and why he hadn’t included such a figure in his original proposals to reform the green investment fund industry of 95 billion pounds.
Baldwin told the MoS: “Consumers who have invested in funds thinking they are doing their part to save the planet should not be forced to bear the cost of the move if they find their fund is not so green. after all.”