The FCA has clarified that defence companies should not be treated differently to firms in other sectors when it comes to its sustainability regulations.

The statement said its sustainable finance rules do not require financial institutions to treat defence companies differently.

It says the rules are aimed at improving information about investments claiming to be sustainable.

The regulator said that the sustainability rules should not be confused with financial institutions’ own policies relating to the type of businesses they wanted to work with.

The regulator issued a statement clarifying its position on defence companies following a letter from MPs asking it to clarify its ESG rules in order to unlock additional investment in defence firms.

Over 100 MPs signed an open letter to banks and fund managers, calling on them to rethink they way they approach ESG due to worries they were excluding, “all defence investment as unethical.”

The FCA statement said: “Our sustainability rules do not prevent investment in or finance for defence companies. The financial sector plays a vital role in supporting all sectors, including defence.  

“There is nothing in our rules, including those related to sustainability, that prevents investment or finance for defence companies. 

“Our sustainable finance rules apply to firms providing financial products and services as well as some listed companies. They do not require financial institutions to treat defence companies differently because they are in the defence sector.”

The regulator added that it was important for consumers to have options to invest in line with their ethical values, making it important that they have the freedom to make choices about where they invest their money.