Securitisation (Amendment) Regulations 2024
Debate between Lord Livermore and Lord Roborough
Lord Livermore (Lab)
My Lords, I am grateful to the noble Lord for introducing this SI and setting out its purpose. I welcome him to his place.
As the noble Lord noted in his opening remarks, this statutory instrument forms part of a wider programme to deliver a smarter regulatory framework for financial services. We support this SI as it closes a potential gap in regulation. We believe that it is part of an important package of reform aimed at developing in our country a securitisation market that contributes to growth in the real economy.
I have just two questions. First, I understand that the FCA and the PRA expect to consult on further changes to their securitisation rules in Q4 2024 and Q1 2025. Is the Minister confident that those timelines will be met? Secondly, in the event of a Dissolution of Parliament, will the regulators be under any rule-making restrictions during the regulated period? Does the Treasury have a clear schedule of SIs that require consideration by Parliament in the remainder of the current Session? I thank the noble Lord in advance for his answers.
Lord Roborough (Con)
My Lords, I am grateful for the contributions to this short debate. I will try to answer some of the detailed questions that were asked as well as I can but I will have to write on some of them, I am afraid.
Let me first respond to some of the points made by the noble Lord, Lord Sharkey. On timing, we expect that commencing the regulations on 1 November will give the industry time to prepare for the PRA’s and the FCA’s new rules, which regulators will consult on. There will be no further legislation. The regulators are consulting on rules to complement the securitisation SIs.
This will not specifically answer the question on risk retention but the UK’s approach currently aligns with the recommendations from the International Organization of Securities Commissions on; we therefore consider this to be best practice internationally at the moment. However, I understand that the noble Lord’s question went further than that, so I will address that.
This SI represents an important step in finalising the UK’s new financial services framework for securitisation. It complements the Securitisation Regulations 2024 by ensuring consistency on due diligence requirements for all firms participating in the securitisation market. It restates an important prohibition on securitisations in high-risk jurisdictions. The SI was scrutinised by the Secondary Legislation Scrutiny Committee, which made no comment on it and did not draw it to the special attention of the House. A de minimis impact assessment was published alongside this SI; it indicates that, on an ongoing basis, the SI should reduce occupational pension schemes’ compliance costs by making the rules more proportionate.
I will need to reply to the noble Lords, Lord Livermore and Lord Sharkey, on some of their detailed questions but I thank both of them for contributing to this debate, which I hope the Committee has found informative. I hope that the Committee will join me in supporting the regulations.