The Financial Conduct Authority on 17 February published proposals to reform the UK securitisation framework, proposing to eliminate unnecessary costs and complexity from rules inherited from the European Union.
Consultation paper CP26/6 sets out changes to due diligence and transparency requirements affecting originators, sponsors, institutional investors and securitisation special purpose entities. The FCA developed the proposals alongside the Prudential Regulation Authority, which issued its own companion paper, CP2/26, covering capital and liquidity rules for PRA-authorised firms.
The reforms follow powers granted under the Financial Services and Markets Act 2023, which allowed UK regulators to replace the EU’s Securitisation Regulation with domestic rules.
What changes
The FCA said existing requirements are often highly prescriptive and burdensome. Its proposals cover four areas:
- Transparency templates: Data templates for underlying exposures, including residential real estate, automobile loans, consumer credit and leasing, would be simplified and aligned with Bank of England loan-level templates already used in market operations. The FCA said this would reduce double reporting.
- Private securitisations: Revised notification templates and streamlined reporting rules aim to lower the administrative burden on private market participants.
- Due diligence: Simplified rules for institutional investors would remove redundant steps, reducing administrative requirements.
- Scope and definitions: The FCA has reviewed the scope of the rules to make them more proportionate for different types of securitisations.
“Our approach in reforming the securitisation rules aims to simplify and streamline our rules and regulatory approach to eliminate unnecessary costs,” the FCA said. “At the same time, we aim to maintain high standards that support market integrity, innovation and competition.”
The PRA’s parallel consultation addresses capital requirements and expectations around significant risk transfer (SRT), addressing significant risk transfer to third parties. An updated supervisory statement on SRT, SS9/13, is set to take effect on 1 January 2027.
Timeline
The consultation is open until 18 May 2026. The FCA said it expects to publish final rules in the second half of 2026. Market participants can respond through the FCA’s online form or in writing to its London office.
Separately on the same date, the FCA issued a decision notice cancelling the Part 4A permission of RDM Trading Ltd for failure to pay regulatory fees totalling £876.15 and failure to submit required regulatory returns.
