FCA outlines its approach to rules for the securitisation market in the UK

On 30 April 2024, FCA published a Policy Statement (PS24/4) with the final approach to rules for the securitisation market in the UK.  

As part of the repeal and replacement of “assimilated law” (meaning retained European Union law), most firm-facing provisions of the UK Securitisation Regulation (UK SR) will be now set out in the FCA and the Prudential Regulation Authority (PRA) rulebooks. A new sourcebook (the Securitisation sourcebook (SECN)) will be added to the Specialist Sourcebooks block within the Handbook. The rules are intended to come into force on 1 November 2024, subject to the Treasury revoking the UK SR and related technical standards. 

FCA say it has largely preserved the relevant requirements of the UK SR along with some proposed targeted policy changes in the following areas: 

• due diligence requirements for institutional investments; 

• risk retention provisions; and 

• geographical scope, the criteria for homogeneity in STS securitisations and credit granting criteria.  

In Q4 2024/Q1 2025 FCA intend to issue a second consultation where it plans to review the definition of public and private securitisations and the associated reporting regime, amongst other areas for policy consideration. FCA have said that any potential changes would aim to make the reporting regime more proportionate, which will be welcome news for impacted firms.  

Firms that are involved in securitisation markets either as institutional investors or as manufacturers are encouraged to review the new rules and update policies and procedures where required. If you require assistance, please let us know.