Alerts Archive

Discussion on FCA's forthcoming consultation paper

On 4 February, we hosted an in‑person roundtable with Anne Wrobel (the FCA’s Head of Wholesale Market Analysis & Policy), ahead of the FCA’s forthcoming consultation paper on securitisation.  Anne shared timely insights on the regulatory direction of travel, opportunities for reform, and how the FCA is thinking about transparency, reporting, and private credit.

The FCA confirmed that it is close to publishing its consultation paper (CP) on securitisation. This will sit within the FCA’s broader regulatory strategy contributing to economic growth, which emphasises clear and trusted regulation, high-quality information and disclosure, and healthy competition. A key objective is to streamline rules, with a more principles-based approach for wholesale markets, providing greater flexibility for firms while maintaining high regulatory standards. 

The FCA reiterated its support for the growth of securitisation, including investments in securitisation. The reforms will focus on the UK Securitisation Regulation, with particular attention on two areas: (i) due diligence requirements, which are currently viewed as overly prescriptive and disproportionate; and (ii) reporting, with the aim of ensuring investors can properly understand and assess risk.  Some additional supervisory work would be expected in the medium term, to understand how the industry is using the new flexibility.  

Templates would be eliminated for non-standardised asset classes (e.g., corporates).  And templates for standardised asset classes (such as CLOs), would be simplified. The CP will also address publication requirements for both public and private securitisations, with a view to reducing burdens for private transactions. 

In terms of process, the CP is imminent and engagement from industry will be important, particularly on reporting requirements. The consultation period will be 12 weeks, with the FCA allowing additional time for dialogue with market participants. Industry input will also be needed to refine certain definitions (including CLOs). The CP will include a discussion chapter posing broader questions, including whether there are structures or circumstances where certain rules should not apply. 

The FCA acknowledged that it is taking a different direction from the EU on some elements of securitisation regulation, compared with the European Commission and ESMA. The focus is on usefulness and regulatory effectiveness rather than competitiveness vis-à-vis the EU. The FCA remains in close contact with other regulators, and described constructive ongoing dialogue. 

The FCA assured members that it was well aware of the importance of the UK securitisation rules remaining compatible with those of the EU (i.e., that the UK rules don’t function in practice as a separate and additional requirement for the many securitisations that are subject to both regimes). 

The discussion also covered private markets. Areas of focus include valuation practices (including ad-hoc valuations and governance), conflicts of interest on the buy-side, and private credit, which is explicitly within scope, including via data gathering and surveys. The FCA is working with the Bank of England on stress testing of non-bank financial institutions (including under System-Wide Exploratory Scenario-related work), and continues to supervise funds, including LTAF authorisation, where private credit is one relevant component. 

Finally, the FCA noted that it is in the middle of the UK AIFMD review and confirmed that work is ongoing on UK recognition of EU STS securitisations.