PS26/22: FCA finalises its regulatory regime for ESG ratings

On 3 November 2026, the FCA published final rules for ESG rating providers in Policy Statement PS26/22.

Although the regime will take effect on 29 June 2028, the FCA’s authorisation gateway for applications to be submitted will open on 24 June 2027.

Scope of ESG ratings regime

The regime will apply to providers of ESG ratings within the FCA’s regulatory perimeter, including certain overseas providers supplying ESG ratings into the UK. An ESG rating will generally fall within scope where it involves an assessment of one or more ESG factors, is produced using an established methodology and defined ranking system, and is made available in circumstances where it is likely to influence decisions relating to specified investments.

The scope of the regime will depend on the nature of the relevant product and the manner in which it is provided. Certain activities may fall outside the regime, including specified intra-group and private-use ratings and ratings produced as part of another regulated activity rather than as a standalone product. Providers will therefore need to assess individual products and distribution arrangements to determine whether they fall within scope.

The regime may also apply to providers established outside the UK where ESG ratings are supplied into the UK for remuneration. Accordingly, a provider’s location outside the UK does not, of itself, exclude its activities from the FCA regime.

Key requirements for ESG rating providers

The FCA’s rules do not prescribe a particular methodology for assessing ESG factors. Instead, they establish requirements governing the production, disclosure and oversight of ESG ratings.

In addition to the FCA’s baseline requirements, providers will be subject to specific obligations in the following areas:

1. Transparency. Providers will be required to publish information about their rating products and provide users with further details regarding methodologies, data and individual ratings. Rated entities will be entitled to request additional disclosures, and users must be notified of material changes to methodologies.

2. Governance and controls. Providers will be required to establish clear accountability arrangements, effective quality assurance and data-validation processes, and regular methodology reviews. Appropriate records must be maintained to support the basis on which ratings have been determined. Where activities are outsourced, providers must retain appropriate oversight and operational responsibility, subject to the relevant restrictions.

3. Conflicts of interest. Providers must identify and manage conflicts capable of compromising the integrity or independence of ESG ratings. This will include maintaining a written conflicts policy, reporting to senior management at least annually, and implementing appropriate controls in relation to personal transactions.

4. Engagement with rated entities. Providers must give rated entities sufficient advance notice before making a rating available for the first time, subject to a minimum period of two business days. Providers must also make underlying data available on request and establish processes for receiving and considering feedback. Publication of a rating will not, however, be contingent on completion of the rated entity’s review.

5. Complaints and accountability. Providers must establish effective procedures for handling and recording complaints and use complaints data to identify recurring issues. Providers will also be subject to the Senior Managers and Certification Regime, requiring appropriate allocation of individual responsibilities.

Next steps

Providers should first determine whether their activities will require FCA authorisation to provide ESG ratings in the UK. This assessment should be undertaken on a product-by-product basis and should inform the scope of permissions sought, the appropriate applicant entity and any changes required to existing governance, disclosure and rating processes.

From February 2027, providers will be able to access the FCA’s pre-application support service to discuss proposed business models, authorisation arrangements and outstanding regulatory questions. Providers, particularly those operating through international groups, should use the period before the authorisation gateway opens to establish the proposed structure and oversight of their UK ESG ratings activities.

The FCA will begin accepting applications for authorisation on 24 June 2027. Firms expecting £500,000 or more in UK ESG ratings revenue in the 12 months following their application must apply by the end of July 2027, while other firms must apply by the end of August 2027. Preparations for authorisation should therefore proceed alongside the operational changes required to comply with the new regime.

The regime will take effect on 29 June 2028. By that date, authorised providers will need to have implemented the required governance, disclosure, rated-entity engagement and complaints arrangements and be prepared to comply with mandatory regulatory reporting requirements.

Further regulatory detail is expected during the implementation period. The FCA intends to consult on annual supervisory fees later in November 2026, publish application materials before the authorisation gateway opens and provide further information on its supervisory approach during the pre-application period. Formal Handbook reporting requirements will follow further testing and consultation, with mandatory reporting applying from commencement.