Providers of environmental, social and governance ratings are set to come under a new UK regulatory framework after the Financial Conduct Authority finalised its rules for the sector. The policy statement was published on 3 November 2026, with the main regime due to begin on 29 June 2028.
ESG ratings assess companies, other organisations, assets or financial products against environmental, social and governance criteria. Asset managers, lenders and benchmark administrators use them, among other purposes, to inform investment decisions and manage risk.
The regulator wants users to be better able to understand the information behind these assessments. Its stated aims include improving transparency, reliability and comparability. Those are objectives of the rules, not a guarantee that every rating will agree or that investments will perform in a particular way.
What providers will have to disclose
The final framework combines minimum public disclosures about rating products with additional information for direct users. Rated entities will be able to request further disclosures. Providers will also need to notify users of material changes to their methodologies.
Public information will include details of policies on data quality and verification, the use of estimates and how often ratings are reviewed. The rules do not require providers to publish precise weightings or training data. A trade-secrets exemption remains available where its conditions are met.
The FCA is not prescribing a single sustainability view or method. A provider will have to apply its own methodology consistently to ratings within the same product line, but different providers can continue to use different approaches. Greater disclosure should help users understand those differences without making the results identical.
Controls and engagement
Providers will need arrangements for governance, quality assurance, data validation and reviews of their methods. They must keep records explaining how ratings were produced and their outcomes reached. The framework is intended to reflect the size and complexity of a firm’s activities while maintaining minimum standards.
The rules also address conflicts of interest. A provider paid by an organisation it rates, for example, must consider the risks that such a business model can create for the independence of its assessments. The framework will require firms to identify, prevent and manage conflicts, with disclosure where required.
When a rating is made available for the first time, providers will have to give sufficient advance notice to the relevant notifiable persons, with at least two business days as a minimum. More notice may be needed depending on the circumstances. A notifiable person must be reasonably identifiable; if a provider cannot identify one after reasonable attempts, notification is not expected. The requirement will not apply retrospectively to ratings made available before the regime begins.
Under the regime, rated entities will be able to request the data used to produce their ratings and offer factual corrections. Providers will need channels for feedback and complaints, but they will not have to wait for an entity’s feedback before making a rating available.
Who is covered and when
Not every piece of sustainability information automatically falls within the new regime. The regulated activity concerns producing and making available an ESG rating that is likely to influence a decision to make a specified investment, subject to the conditions and exclusions in the legislation. The FCA has published guidance to help firms assess their own products and services.
Applications for authorisation are due to open on 24 June 2027. Firms carrying out the regulated activity will generally need authorisation and the relevant permission when the regime starts on 29 June 2028, unless a legal exemption or applicable transitional provision applies. The regulator is encouraging firms to assess their position and prepare before the gateway opens.
Application periods will be staggered. The FCA expects firms forecasting at least £500,000 in UK ESG ratings revenue in the 12 months after applying to submit before the end of July 2027; other firms are expected to apply by the end of August 2027. The FCA plans to offer pre-application support from February 2027.
There is a safeguard for eligible firms that apply within the specified period but are still awaiting a decision when the regime begins: they may be able to continue business while their application is considered, subject to the statutory conditions and time limits. The savings and transitional chapter expires one year after the main commencement date, rather than providing an indefinite substitute for authorisation.
The final rules follow a consultation that opened on 1 December 2025 and closed on 31 March 2026. The regulator retained most of its original proposals but adjusted aspects of disclosure and engagement after considering feedback on clarity and the practical burden on providers.
For users of ratings, the change is about understanding how an assessment was reached and what its limitations are. For providers, it will add regulatory scrutiny of how the information is produced and shared. It does not turn differing judgements about sustainability into a single official score.
