On 17 February 2026, the Financial Conduct Authority (FCA) published Consultation Paper CP26/6 (CP26/6), which sets out proposals to reform the UK’s securitisation requirements including to simplify the due diligence and transparency requirements.

Background

The FCA sets out in CP26/6 that as securitisation markets played a role in the global financial crisis this led to a new regulatory framework being implemented. However, the FCA also explains that industry feedback has pointed to aspects of the securitisation framework that are prescriptive and create material burdens without necessarily achieving material benefits. In light of this feedback, the FCA have published CP26/6, building on CP23/17 and subsequent Policy Statement 24/4, which transferred firm-facing securitisation rules to the FCA Handbook.

CP26/6 is relevant to authorised firms that are involved in securitisation markets either as institutional investors or as manufacturers; unauthorised entities acting as an original lender, originator or securitisation special purpose entity (SSPE) of a securitisation subject to the FCA rules in the Securitisation sourcebook (SECN); individuals holding offices or positions involving responsibility for taking management decisions at firms involved in securitisation markets; UK securitisation repositories (SRs). The FCA has worked closely with the Prudential Regulation Authority (PRA), which has published a parallel Consultation Paper (CP2/26), and the proposals are broadly aligned between the two regulators.

Key proposals

Simplifying due diligence requirements

  • The FCA explains that it considers that appropriate and adequate due diligence is critical to ensure investors understand the risk they are taking when investing in a securitisation, but that it wants to allow institutional investors more flexibility in how they conduct this due diligence. This is because it considers that imposing prescriptive due diligence rules on sophisticated institutional investors is a unique requirement because such investors are typically deemed to be able to make informed decisions.
  • As a result, the FCA are proposing to replace requirements on institutional investors to verify compliance with UK rules or similar standards with an obligation to assess the risks involved in the securitisation to confirm it meets the investor’s risk appetite and that it maintains sufficient alignment of interest between manufacturer and investor.
  • The FCA highlights that it intends that this shift away from the existing rules, that restrict the type of securitisations that an investor can invest in (which are atypical internationally), is aimed at strengthening the competitiveness of FCA-regulated institutional investors.

Streamline transparency requirements whilst maintaining the obligation to provide comprehensive reporting of information for the protection of investors

  • The FCA proposes to reduce the number of specified templates, simplifying retained templates and their format, introducing a new template for collateralised loan obligations, removing the delineation between public and private securitisations, and no longer requiring reporting to SRs.
  • The FCA explains that it considers that the changes to the transparency rules have the potential to better align disclosures with evolving market practices while still recognising that a degree of comparability and standardisation is appropriate for more mature asset classes where it is proposing to retain certain templates.
  • The FCA further highlights that it intends that the streamlining of transparency obligations should materially lower the cost of compliance, making it easier for smaller entities to originate securitisations and potentially attract more manufacturers to the securitisation market.

Additional changes

  • Other proposals including allowing an additional modality for risk retention, introducing certain exceptions to the ban on resecuritisation and providing further clarity on the application of the credit granting criteria.
  • CP26/6 also includes a discussion chapter on the scope of the application of the securitisation conduct rules.

Next steps

The deadline for comments on CP26/6 is 18 May 2026.

In order to provide some additional time for market participants to prepare for the proposed changes to the securitisation rules, the FCA propose that the new requirements would not enter into force until six months after the making of the new rules and explain that they have not included any transitional provisions because of this proposed delay as it considers this to be sufficient time for market participants to make preparations for entry into force of the new rules.