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Regulated Covered Bonds: Feedback on the review of the UK Regulated Covered Bonds Regulatory Framework and final Sourcebook Instrument PS11/16 (11/49)
23 December 2011
Introduction and background
Statement by the FSA:
“Six potential changes were identified to improve the quality of the regime by increasing transparency over the underlying assets and facilitating comparison between the UK and the other covered bond regimes. These formed the basis of the joint FSA/HM Treasury’s consultation published in April 2011. After considering the feedback we received, the FSA and HM Treasury have now implemented these proposals, with some changes.
For further details on the final changes to the RCB regime, see the FSA’s policy statement (PS) and the government’s response to the consultation. In the PS we describe the final changes made to the RCB Sourcebook and outline our feedback on the responses that we received to the consultation.
We are implementing some changes to the RCB Sourcebook, in the light of the feedback we received from the joint FSA/HM Treasury’s consultation published in April 2011. These changes will be enacted on 1 January 2013.
If your firm is directly affected, you need to be aware of the changes to our rules to remain in compliance with the RCB Sourcebook. Changes to the Sourcebook are outlined in Appendix 1 of the PS and will come into effect on 1 January 2013.”
To whom might this apply?
This policy statement will be of interest to UK credit institutions that issue regulated covered bonds, institutions considering applying for RCB status, potential investors, trade bodies and third party advisers.
What impact will this have on your firm?
This policy statement is effectively a feedback on the review of the UK Regulated Covered Bonds Regulatory Framework and final Sourcebook Instrument. It sets out changes to the FSA’s RCB sourcebook following the joint FSA/HM Treasury’s consultation as follows:
- The introduction of consistent standards of investor reporting which will increase transparency for investors and highlight the quality of underlying assets. At the same time the use of common standards will make it easier for investors to compare different programmes. Issuers will be required to provide loan level information on assets in the cover pool.
- Clarification of the role of ‘Asset Pool Monitor’. This codifies the existing UK practice of independent scrutiny of an issuer’s regulated covered bond programme. The FSA will expect issuers to provide reports.
- Refining of regulatory reporting in order to update and consolidate the regulatory reporting required by the FSA when issuers apply to register with the FSA and on an ongoing basis. Such information is used to assess issuers’ applications and also as part of the regular stress testing that the FSA conducts on regulated covered bond programmes.
What to do now
If this applies to you discuss with your CPA account manager. The full text of the Policy Statement can be found here.
© CPA Audit LLP. 23 December 2011.