Britain's financial watchdog is providing temporary leniency to firms to comply with 'naming and marketing' rules aimed at tackling greenwashing until April 2025, it said on Monday.

The new bespoke rule to combat greenwashing, which came into force on May 31, was to stop investment firms from inflating the green credentials of their products to retail customers.

The Financial Conduct Authority (FCA) said firms should take all reasonable steps to ensure compliance with the 'naming and marketing' and disclosure rules, which come into force on Dec. 2.

The regulator asked the firms to comply with the rules as soon as they can, without waiting until the extended date of April 2, 2025.

The compliance deadline extension was granted as some firms, particularly those wanting to use an investment label or needing to alter their product names, require additional time to meet the high standards and prepare the necessary disclosures for approval, the FCA said in a statement.

According to the new rule, any reference to environmental, social and governance (ESG) sustainability topics in a product or service must be fair, clear and not misleading, meaning they can be substantiated.

Trillions of dollars globally have flowed into investment products that tout their sustainability attractions, leaving regulators to play catch-up with new disclosure rules and other safeguards now being rolled out.

(Reporting by Radhika Anilkumar in Bengaluru; Editing by Eileen Soreng)