The United Kingdom Consults On Significant Changes To Its Securitisation Framework

 In this article, the authors examine proposals set out by the UK’s Financial Conduct Authority and Prudential Regulation Authority proposing the most significant overhaul of the country’s securitisation framework since Brexit.

The UK’s Financial Conduct Authority (FCA)¹ and Prudential Regulation Authority (PRA)² have published parallel consultation papers proposing the most significant overhaul of the UK securitisation framework since Brexit. Together, the consultation papers span conduct, disclosure, due diligence and prudential capital requirements. This article sets out the key proposals and their potential impact on the securitisation market.

DUE DILIGENCE

The FCA (in CP26/6)³ and PRA (in CP2/26)⁴ jointly propose replacing the current prescriptive due diligence framework with more principles-based obligations. The FCA is the primary vehicle for these conduct rules, which apply to FCA-regulated institutional investors; the PRA’s parallel proposals apply to PRA-authorised