The Financial Conduct Authority (FCA) has opened a consultation on the new UK securitisation regulation. After Brexit, the European securitisation regulation was initially translated into UK law, which is referred to as “retained EU law” in the UK. This retained EU law is to be gradually converted into UK law. HM Treasury then began to develop a new securitisation regulation in the form of a Statutory Instrument, which will soon be finalised. The Statutory Instrument delegates key content (e.g. the new STS requirements) to the FCA and the Prudential Regulatory Authority (PRA) – and thus to Level II. Hence, the content of securitisation regulation is in the hands of the supervisory authorities and should therefore be more flexible to amend than at Level I.
FCA and PRA with independent consultations
The PRA has already published a consultation on 12 July 2023 on the topics it is responsible for. These include due diligence requirements, risk retention, transparency requirements, prohibition of re-securitisation, criteria for credit-granting and technical standards on risk retention and disclosure.
The FCA has now followed suit in August and also opened an own consultation. The FCA is presenting its proposed changes to the entire UK Securitisation Regulation. The resulting draft for the new regulation, however, continues to be strongly inspired by the European model. The aim of the changes is, of course, to make the regulation more proportionate and to reduce regulatory hurdles.
Both consultations run until 30 October 2023.
To the FCA consultation
To the PRA consultation