The PRA consultation directly addresses securitisation capital requirements and prudential safeguards for PRA-authorised firms, which are predominantly banks and building societies managing credit risk through structured finance instruments.
Securitisation of mortgage loans and credit exposures involves fixed income instruments and asset-backed securities, triggering the mandatory Investment Services parent tag as a secondary classification.
Specialism
The PRA consultation proposes amendments to capital requirements and prudential safeguards for securitisation activities, including risk retention, IRB treatment for mortgage loans, and capital treatment reforms that directly affect the financial soundness of PRA-authorised firms.
Low confidence — requires human review. The consultation includes transparency and reporting requirement reforms that could constitute regulatory reporting obligations, but the primary focus is prudential capital and risk management rather than reporting mechanics.
2026-02-17 16:28:55·2@vixio.support
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TITLE: Bank of England Prudential Regulation Authority Launches Consultation on Securitisation Requirements Reforms
BODY:
On 17 February 2026, the Prudential Regulation Authority (PRA) published Consultation Paper 2/26 (CP2/26), proposing comprehensive reforms to securitisation requirements applicable to PRA-authorised firms in the United Kingdom.
The consultation proposes substantial amendments to securitisation general (conduct) requirements and certain capital requirements under the Capital Requirements Regulation (CRR). The PRA seeks to make existing requirements more proportionate and less prescriptive while maintaining appropriate prudential safeguards. Key proposals include: simplifying due diligence requirements for institutional investors by removing prescriptive verification and monitoring obligations; introducing an "L-shaped" risk retention modality combining vertical and first-loss retention approaches; streamlining transparency and reporting requirements by deleting prescriptive templates and reducing disclosure burdens for single-loan securitisations; exempting two specific resecuritisation structures from the existing ban—resecuritisations of securitisations created by tranched credit protection and resecuritisations of senior securitisation positions—subject to safeguards; clarifying credit-granting criteria to prevent lower-quality exposures being created solely for securitisation; and introducing a risk-sensitive internal ratings-based (IRB) treatment for mortgage loans under the Mortgage Guarantee Scheme and similar private schemes.
The PRA estimates proposed changes to due diligence requirements will generate market-wide cost savings of £1.6 million to £3.3 million, with transparency reforms yielding approximately £2.2 million in compliance cost reductions. The reforms are expected to facilitate competitiveness and growth by lowering barriers to market entry and reducing compliance burdens for securitisation participants.
The consultation closes on 18 May 2026. The PRA proposes implementing changes in the second quarter of 2027, with confirmation to follow in a subsequent policy statement.
Responses should be submitted to CP2_26@bankofengland.co.uk or addressed to the Securitisation Policy team at the Prudential Regulation Authority, 20 Moorgate, London EC2R 6DA.