{
  "url": "https://openlegislation.uk/securitisation-regulations-2024/regulation-32B",
  "json_url": "https://openlegislation.uk/securitisation-regulations-2024/regulation-32B.json",
  "legislation": "uksi/2024/102",
  "legislation_title": "The Securitisation Regulations 2024",
  "legislation_url": "https://openlegislation.uk/securitisation-regulations-2024",
  "path": "regulation/32B",
  "kind": "regulation",
  "number": "32B",
  "heading": "Due-diligence requirements for occupational pension schemes: before holding a securitisation position",
  "text": "(1) Before holding a securitisation position, the trustees or managers of an occupational pension scheme who are not the originator, sponsor or original lender must verify the following matters—\n(a) where the originator or original lender is established in the United Kingdom and is not a CRR firm or an FCA investment firm, that the originator or original lender—\n(i) grants all the credits giving rise to the underlying exposures, unless they are trade receivables not originated in the form of a loan, on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits in accordance with any applicable FCA or PRA rules relating to credit-granting requirements, and\n(ii) has effective systems in place to apply those criteria and processes in accordance with any applicable FCA or PRA rules relating to credit-granting requirements;\n(b) where the originator or original lender is not established in the United Kingdom, that the originator or original lender—\n(i) grants all the credits giving rise to the underlying exposures, unless they are trade receivables not originated in the form of a loan, on the basis of sound and well-defined criteria and clearly established processes for approving, amending, renewing and financing those credits, and\n(ii) has effective systems in place to apply those criteria and processes to ensure that credit-granting is based on a thorough assessment of the obligor’s creditworthiness;\n(c) where the originator, sponsor or original lender is established in the United Kingdom, that—\n(i) the originator, sponsor or original lender continually retains a material net economic interest in accordance with any applicable FCA or PRA rules relating to risk retention requirements, and\n(ii) that risk retention is disclosed to the trustees or managers of the occupational pension scheme in accordance with any applicable FCA or PRA rules relating to transparency requirements;\n(d) where the originator, sponsor or original lender is not established in the United Kingdom—\n(i) that the originator, sponsor or original lender continually retains a material net economic interest which, in any event, must not be less than 5%, determined in accordance with rules made by the FCA or PRA relating to risk retention requirements which would be applicable FCA or PRA rules were the originator, sponsor or original lender to be established in the United Kingdom, and\n(ii) that the originator, sponsor or original lender discloses the risk retention to the trustees or managers of the occupational pension scheme;\n(e) that the originator, sponsor or securitisation special purpose entity—\n(i) has made available sufficient information to enable the trustees or managers of the occupational pension scheme independently to assess the risks of holding the securitisation position, and\n(ii) has committed to make available further information on an ongoing basis as appropriate.\n(2) In paragraph (1)(a)—\n“CRR firm” has the meaning given in Article 4(1)(2A) of the Capital Requirements Regulation;\n“FCA investment firm” has the meaning given in Article 4(1)(2AB) of the Capital Requirements Regulation.\n(3) In the case of a fully-supported ABCP transaction, the trustees or managers of an occupational pension scheme are not required to verify the matters referred to in paragraph (1)(a).\n(4) The information referred to in paragraph (1)(e) must include at least the information specified in the first column of Schedule A1, which must be provided at least with the frequency, or on the occasions, specified in the corresponding entry in the second column of that Schedule.\n(5) Before holding a securitisation position, the trustees or managers of an occupational pension scheme who are not the originator, sponsor or original lender must carry out a due-diligence assessment which enables them to assess the risks involved and consider at least all of the following—\n(a) the risk characteristics of the individual securitisation position and of the underlying exposures;\n(b) any of the structural features of the securitisation that could materially impact the performance of the securitisation position, including the contractual priorities of payment and priority of payment-related triggers, credit enhancements, liquidity enhancements, market value triggers, and transaction-specific definitions of default;\n(c) with regard to a securitisation included on the list maintained under regulation 10(2), compliance with the STS criteria and with any applicable designated activity rules relating to the notification mentioned in regulation 10(1);\n(d) with regard to a securitisation that appears to the trustees or managers to be an overseas STS securitisation—\n(i) whether the securitisation falls within a description of securitisation specified in regulations under regulation 13(1) in relation to a country or territory designated under those regulations, and\n(ii) any matters specified for the purposes of regulation 13(7A)(a) in regulations under regulation 13(1);\n(e) with regard to a securitisation falling within paragraph (3)(b) and (c) of regulation 12, compliance with the requirements referred to in paragraph (3)(a) of that regulation and with Article 27 of the EU Securitisation Regulation 2017 as it had effect in relation to the European Union at the time of the notification mentioned in paragraph (3)(b) of that regulation.\n(6) In addition to the matters specified in paragraph (5)(a) and (b), in the case of a fully-supported ABCP programme, the trustees or managers of an occupational pension scheme investing in the commercial paper issued by that ABCP programme must consider the features of the ABCP programme and the full liquidity support.\n(7) The duty in paragraph (5)(c) applies whether or not a third party verifier has assessed compliance of the securitisation with the STS criteria.\n(8) In considering the matter referred to in paragraph (5)(c), the trustees or managers of an occupational pension scheme may rely to an appropriate extent on the STS notification and on the information disclosed by the originator, sponsor and securitisation special purpose entity concerning compliance with the STS criteria, without solely or mechanistically relying on that notification or information.\n(9) In relation to an overseas STS securitisation, the trustees or managers of an occupational pension scheme may rely on a matter specified under regulation 13(7A)(b) to such extent as regulations under regulation 13(1) provide.\n(10) In considering the matter referred to in paragraph (5)(e), the trustees or managers of an occupational pension scheme may rely to an appropriate extent on the notification referred to in regulation 12(3)(b) and on the information disclosed by the originator, sponsor and securitisation special purpose entity to the European Securities and Markets Authority concerning compliance with the requirements referred to in regulation 12(3)(a), without solely or mechanistically relying on that notification or information.",
  "extent": null,
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "F",
      "label": "F1",
      "text": "Regs. 32A-32D inserted (1.11.2024) by The Securitisation (Amendment) Regulations 2024 (S.I. 2024/705), regs. 1(3), 2(7)"
    },
    {
      "type": "footnote",
      "label": "f1",
      "text": "EUR 2013/575."
    },
    {
      "type": "footnote",
      "label": "f2",
      "text": "Section 71N was inserted by section 8 of the Financial Services and Markets Act 2023."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/uksi/2024/102/regulation/32B",
    "retrieved_at": "2026-10-28T21:35:26.902265+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}