The ESG ratings that feed into insurers’ underwriting and investment decisions will be regulated in the UK for the first time, after the Financial Conduct Authority finalised its rules for rating providers.
Under policy statement PS26/22, published on 3 November, firms providing ESG ratings in the UK will need FCA authorisation, and the relevant permission, from 29 June 2028, unless an exemption applies. Providers can apply for authorisation from 24 June 2027. The FCA is staggering application periods and has urged firms to apply as early as possible within their window.
The framework sets requirements across four main areas: transparency in how ratings are produced and communicated; governance standards; systems and controls; and the management of conflicts of interest. It also introduces an engagement obligation, requiring rating providers to engage both with the entities they rate and with users of those ratings.
The FCA said the rules regulate how ratings are produced, governed and communicated, and do not prescribe a particular sustainability view or methodology. Requirements are designed to be proportionate to firms’ size and activities, and are informed by international standards including recommendations from IOSCO.
The final rules follow the FCA’s consultation, CP25/34, which ran from 1 December 2025 to 31 March 2026, and government legislation that brought ESG ratings within the FCA’s regulatory remit in October 2025. In the government’s consultation, 95% of respondents supported the move.
“Trusted information is essential for well-functioning markets,” said Laura Dawes, director of authorisations and sustainable finance at the FCA. “These rules will help improve transparency and raise standards across the ESG ratings market while supporting competition, innovation and growth. Firms should check now whether they are in scope and start preparing for authorisation.”
For insurers, the reliability of ESG ratings has practical weight. ESG ratings increasingly influence insurers’ underwriting decisions, investment strategies and risk reporting. Where a ratings provider’s methodology has been opaque or inconsistently applied, the new transparency requirements should produce more defensible data for insurers using those ratings in their models.
For brokers with corporate clients, the most relevant element is the rated-entity engagement requirement. Where a client’s ESG rating feeds into an insurer’s view of its risk, the new rules will give the client a regulated provider to engage with from 2028 - and a formal basis to challenge a rating it believes is inaccurate or based on stale information. That changes the dynamic for clients seeking to improve their risk profile ahead of renewal.
