European Fund and Asset Management Association urges changes to EU securitisation review over due diligence and duplicate sanctions

The European Fund and Asset Management Association has responded to the European Parliament ECON Committee vote on the review of the EU Securitisation Regulation, arguing that the current text is not ambitious enough to prioritise European investors or support Savings and Investment Union objectives. EFAMA said the proposal would help increase supply through targeted changes to the Capital Requirements Regulation and Solvency II, but that important parts of the investor-side framework still risk suppressing demand. It identified two main shortcomings. Due diligence requirements remain too prescriptive, including for third-country issuers, and should be simplified so the industry can obtain sufficient information from issuers and manage the related risks without unnecessary red tape. EFAMA also warned that the current text could extend Securitisation Regulation sanctions for due diligence breaches to asset managers, even though they are already subject to sanctioning regimes under Undertakings for Collective Investment in Transferable Securities and the Alternative Investment Fund Managers Directive, creating what it described as a redundant and duplicative layer. Ahead of trilogue negotiations, EFAMA called on policymakers to strike a better balance between risk regulation and market development, including by removing barriers to third-country investment and avoiding duplicative reporting requirements.