Financial Conduct Authority consults on simplified UK securitisation rules including principles-based due diligence and removal of mandated securitisation repository reporting

The Financial Conduct Authority has published a consultation paper proposing a material simplification of the UK securitisation conduct framework in its Securitisation Sourcebook, aiming to reduce prescriptive requirements for institutional investors and manufacturers while maintaining core post-crisis safeguards. The package centres on a more principles-based approach to due diligence and a streamlined transparency regime, alongside targeted changes on risk retention, resecuritisation and credit granting. Key proposals for investors include removing current requirements to verify manufacturers’ compliance with UK credit granting, transparency and risk retention rules, and instead focusing due diligence on obtaining sufficient information and assessing whether a securitisation fits the investor’s risk appetite. For non-UK transactions, the FCA proposes replacing the 5% risk retention verification with a requirement that investors are satisfied there is a sufficient and appropriate alignment of commercial interest between manufacturer and investor. The FCA also proposes removing prescribed lists of structural features to assess, dropping requirements to verify Simple, Transparent and Standardised status, and simplifying ongoing monitoring obligations by moving away from prescriptive stress testing and other granular process requirements. For manufacturers, proposals include reducing and simplifying disclosure templates, introducing a new collateralised loan obligations template, aligning retained loan-level templates to Bank of England formats for certain asset classes, removing the XML requirement, and largely removing the distinction between public and private securitisations for transparency purposes. Subject to legislative change, the FCA proposes ceasing to require reporting to FCA-registered securitisation repositories and deleting related rules, while also simplifying document provision requirements and extending the deadline for final documents to the earlier of 30 days after closing or the first scheduled interest payment date. Additional measures include moving private securitisation notifications from the 2019 direction into FCA rules with revised fields and relaxed timing, giving private STS manufacturers the option to publish full or anonymised notification details, permitting an L-shaped risk retention modality (still subject to a minimum 5% nominal retention), clarifying credit granting standards, and enabling FCA-regulated investors to invest (without a waiver) in two PRA-proposed exempt resecuritisation structures where conditions are met. Responses are requested by 18 May 2026. The FCA expects to make final rules in H2 2026 and proposes that new requirements would enter into force six months after the rules are made, with implementation of certain changes (including removal of requirements tied to regulated securitisation repositories) dependent on HM Treasury legislative amendments; the Prudential Regulation Authority is consulting in parallel for PRA-authorised firms.