The Securitisation Regulations 2024

Power of FCA to give directions

6.—(1) The FCA may give directions under section 71O of FSMA 2000(1) imposing on a person or a description of persons such requirements as the FCA considers appropriate in relation to the carrying on of an activity specified in regulation 4.

(2) In the following provisions of this regulation “a direction” means a direction given under section 71O of FSMA 2000 by virtue of paragraph (1).

(3) The FCA may give a direction only if it appears to the FCA—

(a) in the case of a direction given to a person, that in carrying on the activity the person is failing, or is likely to fail, to comply with a requirement imposed—

(i) by designated activity rules made by virtue of regulation 5, or

(ii) by Part 4 (simple, transparent and standardised securitisations), or

(b) in the case of a direction given to a person or a description of persons, that it is desirable to exercise the power—

(i) in order to reduce risks, including reputational risks, arising from participation in securitisations or investment in securitisations, or

(ii) in order to advance any of the FCA’s operational objectives set out in section 1B(3) of FSMA 2000(2).

(4) Subject to paragraph (5), the power to give a direction includes (among other things) power—

(a) to prohibit a person from selling a securitisation position to retail clients;

(b) to impose requirements with respect to—

(i) due diligence in relation to any securitisation, including monitoring, stress-testing and risk management,

(ii) the retention of any interest or risk in any securitisation or the selection of the assets for the securitisation,

(iii) the provision of information in relation to any securitisation,

(iv) the inclusion of securitisation positions in the underlying exposures that may be used in a securitisation, or

(v) arrangements concerning the granting of credit applying to exposures to be securitised, or verification of the making of such arrangements where the originator purchases exposures from a third party on its own account.

(5) A direction may not impose requirements on a PRA-authorised person with respect to any of the matters mentioned in paragraph (4)(b).

(6) Paragraph (5) does not apply to the imposition of requirements with respect to STS criteria or STS notifications.

(7) Before giving, varying or revoking a direction where the exercise of the power relates to a PRA-authorised person, the FCA must consult the PRA.

(1)

Inserted by section 8(2) of the Financial Services and Markets Act 2023.

(2)

Section 1B was inserted by section 6(1) of the Financial Services Act 2012.