Rules around ethical investing under review

Integrated Financial Products; whatever they were, now have a proper name.

Thursday, October 16th 2025, 7:08AM

The Financial Markets Authority is dropping the phrase it coined for ethical investments, Integrated Financial Products and replacing it with, guess what? Ethical Investments.

The regulator has released a draft disclosure guidance for financial products with ethical characteristics, to replace its 2020 Disclosure Framework for Integrated Financial Products and guidance contained in the 2022 thematic review of managed fund documentation.

The FMA notes ethical investing is growing in popularity and investors want products that align with their values. Clear, substantiated disclosures are essential to maintain trust, it says.

FMA Executive Director of Response and Enforcement, Louise Unger, said: “Our research has shown that ethical investment opportunities are increasingly important for investors. However, investors don’t always investigate the underlying details of their investments, and understandably place a lot of trust in issuers to deliver the advertised benefits of ethical investment products.

“Ethical investment disclosures are a priority for us, as outlined in our Financial Conduct Report. We want to encourage issuers to provide clear, concise, and effective disclosure when they incorporate values-based or ethical factors into their financial products, which means including all material information and ensuring they avoid being misleading or deceptive,” she says.

“We also want investors to be able to rely on the claims made by issuers and make well-informed decisions about their investments. There is a risk that confusing, unclear, and inconsistent disclosure and advertising for ethical investment leads to uninformed investor decision-making and damages trust and confidence in ethical products.

There are no substantive new obligations in the draft, DLA Piper says in a note.

“The proposed guidance largely repeats the guidance it replaces, but provides more context, and examples, which are useful.”

The FMA sets out four key principles designed to guide issuers in meeting their fair dealing obligations under the Financial Markets Conduct Act.

Claims need to be clear
Claims need to be substantiated
Messages need to be consistent
Third party involvement needs to be effectively managed

DLA Piper says "The FMA’s guidance is a clear restatement of the law applying to ethical investments. It’s encouraging to see the move away from the somewhat unintuitive Integrated Financial Products label, with a sharper focus on the common challenges issuers face when offering ethical investments (such as screens, impact, stewardship, and reliance on third party data providers)."

"The inclusion of detailed examples provides much-needed transparency on what may constitute misleading conduct, helping issuers understand what might trigger enforcement action. We encourage issuers to review the examples contained in the guidance not mentioned in this article.

"We query whether the references to climate-related disclosures and financial advice should be removed from the guidance, given they operate under different (and evolving) regimes and are subject to separate frameworks and standards."

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