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On 13 December 2024, the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published Q&As with further details on three specific aspects of the practical application of their Guidelines on funds’ names using ESG or sustainability-related terms (the Guidelines). 

The Q&As cover:

  • meaningfully investing in sustainable investments

Background

In the United Kingdom, prior approval must be obtained from the Financial Conduct Authority (the “FCA”) or the Prudential Regulation Authority (the “PRA”) prior to becoming a “controller” of an FCA or PRA authorised firm (an “Authorised Firm”).

Such approval is obtained via a “change in control” filing

The recent ESMA Final Report on the Guidelines for funds’ names using ESG or sustainability-related terms (the “Guidelines”) marks a critical moment for asset managers. These Guidelines aim to clarify when the use of ESG or sustainability-related terms in fund names may be deemed unfair, unclear or misleading. The Guidelines introduce minimum asset allocation thresholds

  1. Background

Private equity firms could face significant sanctions risks when doing business with entities connected to sanctioned jurisdictions (such as Russia). These risks may arise in a number of ways (either directly or via indirect connections to sanctioned entities / individuals), including:

  • if potential acquisition targets
  • On 7 October 2024, the FCA issued a “Dear CEO letter” (“Letter”) to firms whose primary business is financial advice or investment intermediation. The Letter contains a summary of the FCA’s priorities and expectations of firms in this sector.

    Priorities

    The FCA’s priorities over the next two years are:

    1. to reduce and prevent