The Financial Conduct Authority has launched Consultation Paper CP26/6 proposing reforms to the UK securitisation conduct framework in its Securitisation Sourcebook, aiming to replace highly prescriptive requirements with a more principles-based regime and reduce compliance burden for institutional investors and securitisation manufacturers. On due diligence, the proposals would remove investors’ current obligations to verify manufacturers’ compliance with UK credit granting, transparency and risk retention rules, and instead require investors to assess securitisation risks against their own risk appetite and confirm sufficient alignment of interests with non-UK manufacturers. The FCA also proposes to drop prescribed lists of structural features to be reviewed, remove investor obligations to verify STS status, and make ongoing monitoring proportionate to risk. On transparency, the FCA would reduce and simplify reporting templates, stop requiring XML, introduce a new template for collateralised loan obligations, align retained loan-level templates with the Bank of England’s formats for certain asset classes, remove most public versus private distinctions, and, subject to legislative change, end the requirement to report to regulated securitisation repositories. Further proposals include introducing L-shaped risk retention as an additional eligible modality (still meeting the 5% minimum), clarifying credit granting criteria, adjusting documentation requirements and timelines for providing final documents, moving private securitisation notifications from a Direction into rules with revised timing and submission arrangements, and allowing certain limited exceptions to the resecuritisation ban for FCA investors where the resecuritisation is originated by a Prudential Regulation Authority authorised person. The consultation closes on 18 May 2026 and the FCA expects to make final rules in H2 2026, with a proposed six-month delay between publication of the final instrument and the new requirements coming into force.
Financial Conduct Authority 2026-02-17
Financial Conduct Authority consults on major simplification of UK securitisation due diligence and transparency rules
The Financial Conduct Authority issued Consultation Paper CP26/6 to reform the UK securitisation conduct framework, shifting from prescriptive requirements to a principles-based regime to ease compliance for investors and manufacturers. Key proposals include removing investor obligations to verify manufacturers' compliance, simplifying reporting templates, and introducing L-shaped risk retention. The consultation closes on 18 May 2026, with final rules expected in H2 2026.