LawFlash

FCA & PRA Consultations on the UK Securitisation Framework

February 23, 2026

The UK Financial Conduct Authority (FCA) and the Prudential Regulation Authority of the Bank of England (PRA) have each published a consultation paper in relation to proposed changes to the UK securitisation framework. These contain important proposals in relation to the UK securitisation regime.

BACKGROUND

The UK framework for the regulation of securitisation in the United Kingdom currently consists of (1) the Securitisation Regulations 2024 (SR 2024) (a UK statutory instrument), (2) the securitisation sourcebook of the handbook of rules and guidance adopted by the FCA (FCA Rules), (3) the Securitisation Part of the rulebook of published policy of the Prudential Regulation Authority (PRA Rules) and (4) relevant provisions of the Financial Services and Markets Act 2000, as amended (together, the UK Securitisation Framework). The UK Securitisation Framework came into force on 1 November 2024, following a consultation process, and replaced the previous regime (UK Securitisation Regulation Regime) which was closely based on the EU Securitisation Regulation regime.

At that time, in a significant move, many of the provisions in the UK Securitisation Regulation Regime were moved to the rulebooks of the FCA and the PRA, changing the approach to the regulation of securitisation in the UK.

Key changes in the UK Securitisation Framework from the UK Securitisation Regulation Regime included amendments to the investor due diligence requirements, making them more principles-based, the inclusion of provisions setting out how the “sole purpose test” should be interpreted and clarifications in relation to the transparency requirements. For further information, please see our report, New UK Securitisation Rules Published.

Following these initial changes, it was expected that there would be a second consultation which would focus on whether the disclosure requirements for “private” securitisations could be made more proportionate, whether limited adjustments could be made to the existing disclosure templates which would apply to “public” securitisations, and in connection with these issues, how “public” and “private” securitisations[1] should be categorised. In addition, it was expected that the due diligence requirements could be reviewed further.

THE FCA AND PRA CONSULTATION PAPERS

Each of the FCA and the Bank of England (which includes the PRA) published a consultation paper—CP26/6: Rules for reforming the UK Securitisation Framework and CP2/26 – Reforms to securitisation requirements, respectively (together, the Consultation Papers) on 17 February 2026 explaining their proposed amendments to the FCA Rules and the PRA Rules respectively, together with the related draft amendments. The proposals in the Consultation Papers are closely aligned. The proposed amendments are quite extensive and go further than originally anticipated. Consequently, the implementation of these proposals would represent a significant overhaul of the current UK Securitisation Framework. The purpose of this LawFlash is to provide a high-level summary of the proposed changes.

INVESTOR DUE DILIGENCE

The Consultation Papers propose a number of amendments which would significantly simplify the requirements that apply to institutional investors who wish to invest in a securitisation position. Instead of a prescriptive approach to investor due diligence, the FCA and the PRA propose to put in place more proportionate requirements. While investors will still be required to assess the risks involved in the relevant securitisation, and to monitor the transaction, the amendments would provide more flexibility to investors in determining what information is appropriate, bearing in mind the risks involved in the particular securitisation.

The proposed changes include the following:

Current UK Securitisation Framework rules

Proposed FCA Rules and PRA Rules
  • Before investing in a securitisation position, investors need to verify compliance with credit granting requirements (except where the originator or original lender is a CRR firm or FCA investment firm and except in the case of trade receivables not in the form of a loan).
  • Investors will need to consider the originator’s credit granting standards and processes as part of their initial due diligence assessment (except where the originator or original lender is a CRR firm or FCA investment firm and except in the case of trade receivables not in the form of a loan).
  • Before investing in a securitisation position, investors need to verify compliance with risk retention requirements.
  • No requirement for investors to verify risk retention with respect to UK originators, sponsors and original lenders. The relevant sell-side parties will continue to be directly subject to risk retention obligations.
  • With respect to non-UK originators, sponsors and original lenders, investors will be required to consider whether one of those entities has and will maintain on an ongoing basis sufficient and appropriate alignment of commercial interest with the investor in the performance of the securitisation. This could either be by way of confirming risk retention of not less than 5% or by some other way of maintaining material alignment of commercial interest with the investor, such as the payment of management fees linked to the performance of the securitisation. It is anticipated that this could allow UK regulated investors to invest in transactions such as US collateralised loan obligations (CLOs) that are not subject to risk retention requirements.
  • Before investing in a securitisation position, investors are required to verify that the originator, sponsor or securitisation special purpose entity (SSPE) has made available sufficient information to enable the investor independently to assess the risks of holding the securitisation position and has committed to make further information available on an ongoing basis.
  • The PRA Rules and the FCA Rules each contain a list of the information which must be obtained—this includes:
  • details of the underlying exposures/receivables;
  • investor reports;
  • all information on the legal documentation needed to understand the transaction, including details of the structure, credit enhancement, cash flows and loss waterfall, voting rights and triggers;
  • information on material changes or events;
  • any prospectus or offering document; and
  • any STS notification.
  • Before investing in a securitisation position, investors will be required to verify that the originator, sponsor or SSPE has made available sufficient information to enable the investor independently to assess the risks of holding the securitisation position and has committed to make further information available on an ongoing basis, to enable the investor to monitor the performance of the securitisation position and the underlying exposures.
  • The list of information will be moved to a guidance provision that (in the proposed amendments to the FCA Rules) states that the information to be made available should be proportionate to the risk of the investment. The draft provisions indicate that the relevant information to be obtained may include the items set out in the list.
  • Before investing in a securitisation position, investors must carry out a due diligence assessment with respect to:
  • the risk the structural features of the securitisation which may materially impact the performance of the securitisation position (which must include consideration of certain specified features); and
  • characteristics of the securitisation position and the underlying exposures;
  • in the case of a simple, transparent and standardised (STS) securitisation, whether there has been compliance with the STS requirements.
  • Before investing in a securitisation position, investors must carry out a due diligence assessment in order to obtain a comprehensive and thorough understanding of the risks involved, which must include consideration of:
    • the risk characteristics of the securitisation position and the underlying exposures; and
    • the structural features of the securitisation.
  • However, the specified structural features will be moved to a guidance provision setting out which features may be relevant.
  • No requirement to verify compliance with STS requirements.
  • While holding a securitisation position, investors must:
  • establish written procedures to monitor the securitisation position and the underlying exposures (which must include monitoring of various specified aspects);
  • carry out stress tests;
  • ensure internal reporting; and
  • be able to demonstrate a comprehensive understanding of the securitisation position and the underlying exposures.
  • Monitoring will still be required, but there will be no requirement to establish written procedures. The list of specified aspects to be monitored will be moved to a guidance provision setting out which elements of a securitisation it may be relevant to monitor.
  • Other requirements will be deleted from the relevant FCA Rules or PRA Rules (although the FCA notes that compliance with certain aspects will still be required, e.g. under other provisions).

TRANSPARENCY

The FCA and the PRA propose significant changes to the transparency requirements in relation to the information that is required to be provided by UK regulated sell-side parties. They have abandoned the idea of distinguishing between, and redrawing the line between, “public” securitisations and “private” securitisations with a view to making the requirements for “private” securitisations less onerous, and instead there will be no distinction between the two. The proposed amendments to the information to be provided and the related requirements include the following:

Current UK Securitisation Framework rules

Proposed FCA Rules and PRA Rules
  • Information on the underlying exposures, in the form of the applicable reporting template, to be provided quarterly for non-ABCP securitisations and monthly for ABCP securitisations.

Commercial real estate, corporate exposures which are not CLOs, credit cards and esoteric assets:

  • Underlying exposures reporting templates will be removed altogether.
  • Templates will be replaced with a principles-based approach.
  • For short-term exposures such as credit cards and trade receivables, investor reports with aggregate data will be required.
  • In other cases, information will be required to be provided on certain specified aspects with respect to the relevant asset class.

    Residential real estate, automobiles, consumer and leasing exposures:

  • Underlying exposures reporting templates will continue to be required, since standardised reporting is still considered useful.
  • However, the related templates will be amended, with the number of fields reduced, and the templates will be aligned with the Bank of England loan level data templates used for assessing eligible collateral for its lending facilities.
  • In the event that UK sell-side parties are providing the equivalent EU underlying exposures reporting templates with respect to these asset classes, they will not have to provide the relevant UK reporting template. This will be reviewed in the event of amendments to the EU reporting templates.

    CLOs:

  • A new tailored and simplified underlying exposures reporting template will be put in place.
  • Unlike with other reporting templates, this reporting template will still be required in the event that the equivalent EU underlying exposures reporting template is provided.

    Add-on template for non-performing exposures:

  • Reporting template will continue to be required.
  • The template will be redesigned so the format is aligned with the other revised templates but the content will remain substantially the same.
  • In the event that UK sell-side parties are providing the equivalent EU underlying exposures reporting template, they will not have to provide the relevant UK reporting template. This will be reviewed in the event of amendments to such EU reporting template.

    ABCP:

  • Underlying exposures template will be removed.
  • Underlying exposures information will need to be made available in aggregate form to investors on a monthly basis.
  • Underlying exposure information at individual underlying exposure level will need to be made available to the sponsor and on request to investors and potential investors.

    Other changes:

  • Exemption from reporting on an underlying exposures reporting template for single-loan securitisations.
  • Clarification in relation to long first interest periods—disclosure to be made no later than one month after the due date for the first interest payment.
  • Templates will be deleted from the PRA Rules and will be in the FCA Rules only.
  • All documentation essential to the understanding of a securitisation position must be provided, including the final offering document or prospectus, together with the transaction documents.
  • Information to be made available in draft or initial form before pricing or initial commitment to invest.
  • Final versions to be provided by 15 days post-closing.
  • Offering document/prospectus/term sheet plus transaction documents to be provided.
  • Detailed list of required documents to be removed.
  • Information to be made available in draft or initial form before pricing or initial commitment to invest.
  • Final versions to be provided by earlier of 30 days post-closing or first scheduled interest payment date.
  • Disclosure in relation to risk retention.
  • If no prospectus is required, a transaction summary or overview of the main features of the transaction must be provided
  • No requirement for a transaction summary.
  • Any STS notification must be provided
  • Any STS notification must be provided
  • Investor reports to be provided in the form of the relevant template (non-ABCP or ABCP, as applicable), quarterly for non-ABCP securitisations and monthly for ABCP securitisations.
  • Investor reports templates to be removed.
  • Investor reports will need to be provided and will need to include certain information as listed in the FCA Rules or the PRA Rules, as applicable.
  • Inside information or significant event information to be made available without delay.
  • For “public” securitisations, this must be in the form of the prescribed reporting template.
  • Inside information or significant event information to be provided but no prescribed template (note that for private transactions, notification to the FCA will be required under the relevant notification template referred to be below).
  • “Public” securitisations to be reported to a securitisation repository.
  • No requirement for information to be reported to a securitisation repository (regardless of whether the securitisation is “public” or “private”).
  • Securitisation repositories will not need to be regulated and may still be used as a means to make information available to investors and potential investors.
  • Notification to FCA/PRA for “private” securitisations in the form of the required template, under the joint FCA/PRA Direction.
  • Notification to FCA only, under the FCA Rules and the PRA Rules.
  • Some minor changes to the FCA private notification templates.
  • Reporting templates to be provided in XML format.
  • No need for reporting templates to be provided in XML format. Templates must be provided in an electronic and machine-readable format.
  • Five possible “no data” options available.
  • Template fields will be either mandatory or optional.
  • One type of “no data” response only.

RISK RETENTION

The FCA and the PRA propose to allow an L-shaped method of risk retention in addition to the existing five risk retention options. This would allow risk retainers to retain risk based on a combination of a percentage of the first loss tranche and a vertical slice of each of the other tranches, such that the retained interest in total amounts to at least 5% of the nominal value of the securitised exposures.

In the case of multiple retainers, each retainer would need to retain pro rata and in the same proportion of the two limbs of the L-shape as the other retainers.

RESECURITISATIONS

Resecuritisations would remain generally prohibited, but the exceptions to the ban on resecuritisation would be expanded to include the following:

  • securitisations of the most senior securitisation positions; and
  • securitisations of securitisation positions constituted by a single exposure and directly related credit protection that causes the credit risk of the exposure to be tranched,

subject to certain conditions.

CREDIT GRANTING

The requirements are proposed to be clarified, including as follows.

Sound and well-defined criteria for credit granting will be required to be applied to exposures to be securitised, regardless of whether there are other non-securitised exposures.

Originators, sponsors and original lenders will be required to ensure that the credit granting criteria and processes applicable to securitised exposures are not less stringent than those that would have been applicable to comparable assets remaining on balance sheet.

STS

The FCA proposes that STS notifications for “private” securitisations, which are currently anonymised, can be made public if the parties so wish.

NEXT STEPS

Responses to the Consultation Papers are requested to be provided by 18 May 2026. The final rules are expected to be published in the second half of 2026. The rules would be expected to come into force six months after that. The FCA and the PRA are also considering with HM Treasury whether the SR 2024 should be amended to align the due diligence requirements for occupational pension schemes with the proposals.

CONCLUSION

It seems very likely that the proposed amendments will be seen as positive. They represent substantial changes to the UK Securitisation Framework and clearly demonstrate that the FCA and the PRA have considered carefully the feedback provided by market participants and have developed pragmatic and creative solutions with the aim of supporting the UK securitisation industry while maintaining robust standards. Burdensome requirements which are thought to have little benefit have been removed, and it is expected that significant cost savings will be achieved. It is hoped that by making the UK securitisation rules more streamlined, flexible and proportionate, this will facilitate the growth of the UK securitisation market, which in turn could help promote the growth of the UK economy.

HOW WE CAN HELP

We expect to be closely monitoring further developments in relation to the UK Securitisation Framework, and the EU Securitisation Regulation regime. We frequently advise our clients on the implications of the UK Securitisation Framework and the EU Securitisation Regulation for their transactions. We would be delighted to discuss any of these developments in more detail.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:

Authors
Merryn Craske
Chicago
Patrick J. Lampe
Philip W. Russell
Jeffrey D. Weinstein
Milan G. Wozniak
London
Merryn Craske
Theresa Kradjian
Dasha Sobornova
New York
Steven H. Becker
M. John Goswell
Matthew P. Joseph
Tamar Keil
Keith L. Krasney
Steve Levitan
Philip S. Sarid
Edmond Seferi
Edward J. L. Southgate
David D. Sylofski
Paris
Clément Vandevooghel
Washington, DC
Cory E. Barry
Brandon Figg
Joseph V. Gatti
Asa J. Herald
Eileen J. Ho
Gregory Mottla
Jeffrey R. Johnson
Mark R. Riccardi
Paul R. St. Lawrence
Alex Velinsky

[1] Currently the concept of a “public” securitisation refers to a transaction where a prospectus is required to be drawn up, and is a transaction which is traded on a UK regulated market. The concept of a “private” securitisation refers to a securitisation which is not a “public” securitisation.