In February 2026, the FCA published CP26/6, setting out proposals to reform the UK securitisation framework. The consultation forms part of a broader programme, developed alongside the Prudential Regulation Authority (PRA), to simplify existing rules while maintaining strong investor protections and supporting the competitiveness of the UK financial services sector.
Background
The UK securitisation regime has evolved significantly since the global financial crisis, when stricter regulatory standards were introduced to address systemic risks associated with complex structured products. Following the UK’s departure from the EU and the subsequent transition of EU securitisation rules into domestic legislation, regulators have reviewed the framework to determine whether it remains fit for purpose. The FCA and PRA have indicated that the current regime may be overly prescriptive and could discourage both issuers and investors from participating in UK securitisation markets. CP26/6 therefore proposes targeted reforms aimed at reducing unnecessary complexity and operational burden, while preserving the core safeguards designed to ensure market transparency and investor protection.
Key Objectives of the Consultation
The FCA outlines several objectives underpinning the proposed reforms:
- Simplifying regulatory requirements to reduce compliance costs and legal uncertainty.
- Improving proportionality in the application of securitisation rules.
- Encouraging market participation by removing barriers to issuing and investing in securitised products.
- Maintaining high standards of investor protection and market integrity.
Collectively, these changes are intended to support the development of a more efficient securitisation market that can facilitate investment and support economic growth.
Proposed Changes
- Simplification of Due Diligence Requirements
One of the most significant proposals is the move towards a more principles-based approach to due diligence obligations for institutional investors. Under the current framework, investors must verify that sell-side parties comply with several regulatory requirements, including risk retention and disclosure rules. The proposed approach would remove certain prescriptive verification requirements and instead focus on investors conducting appropriate due diligence based on the nature and complexity of the transaction. This change is intended to reduce administrative burdens while still ensuring that investors maintain a clear understanding of underlying risks.
- Revised Risk Retention Framework
The consultation introduces the possibility of a new “L-shaped” risk retention option. Under this structure, the required 5% net economic interest could be retained through a combination of:
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- a vertical slice across all securitised exposures; and
- a horizontal first-loss tranche.
This approach is designed to provide greater flexibility in how originators demonstrate alignment of interests with investors and better reflect market practice, particularly in collateralised loan obligation (CLO) transactions.
- Changes to Transparency and Reporting Requirements
The FCA also proposes simplifying transparency requirements, including revisions to the templates used to disclose underlying exposures. The aim is to align disclosure templates more closely with loan-level data templates used by the Bank of England, thereby improving consistency across regulatory reporting frameworks and reducing duplication for market participants.
- Discussion on the Scope of the Regime
In addition to formal proposals, CP26/6 includes a discussion chapter on the scope of the securitisation framework.
The FCA is seeking industry views on whether the current scope appropriately captures relevant entities and transaction types. Areas of interest include:
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- CLOs,
- whole-business securitisations, and
- correlation trading portfolios.
At this stage, the FCA has not proposed specific amendments but is gathering feedback to inform future policy development.
Implications for Firms
The proposals will primarily affect:
- FCA-authorised firms participating in securitisation markets as investors or originators;
- unauthorised entities acting as originators, lenders or securitisation special purpose entities (SSPEs); and
- UK securitisation repositories responsible for reporting transaction data.
If implemented, the reforms could reduce operational complexity and encourage greater participation in UK securitisation markets. The consultation is open until 18 May 2026, with final rules expected in the second half of the year. Firms involved in securitisation transactions should consider reviewing the consultation proposals and assessing their potential operational and compliance implications.
How Complyport can help?
At Complyport, we help firms navigate evolving regulatory and compliance landscapes, translating complex requirements into practical, actionable solutions. As the FCA proposes reforms to the UK securitisation framework in CP26/6, firms involved in securitisation transactions may need to reassess their due diligence processes, governance structures, and reporting frameworks. Our specialists work with organisations to ensure they remain compliant while adapting effectively to evolving regulatory expectations.
- Regulatory Impact and Compliance Readiness: We assist firms in analysing how proposed regulatory reforms may affect their current securitisation activities. This includes reviewing existing due diligence practices, identifying potential compliance gaps, and developing implementation plans aligned with the FCA’s proposed principles-based approach.
- Governance and Accountability Frameworks: Effective governance remains central to regulatory compliance. We support firms in reviewing internal governance arrangements, clarifying responsibilities across senior management and key control functions, and ensuring oversight mechanisms align with evolving regulatory expectations.
- Due Diligence, Risk Retention and Control Frameworks: Our team helps firms assess and strengthen their due diligence and control processes in light of proposed changes to investor obligations and risk retention structures. This includes reviewing policies, procedures, and documentation to ensure they support robust risk assessment and regulatory compliance.
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