UK Law and Practice Contributed by: Guy O’Keefe, Richard Jones, Oliver Wicker and Kate Patane, Slaughter and May
Similarly, servicing activities facing customers are typically regulated and require regulatory permission. It is therefore a servicer – with the appropriate permissions – that performs this role, rather than the SPE. If an SPE performs regulated activities, it could face enforcement actions, including fines or sanctions, and may be required to cease activi - ties or obtain the appropriate authorisations, which could impact the securitisation structure. In practice, this is a fairly minimal risk and is unlikely to arise with proper drafting of the trans - action documents and transaction structuring. 4.12 Participation of Government- Sponsored Entities The UK government has an established histo - ry of participating in the securitisation market, albeit to a much more limited extent than US agencies. Examples include the securitisation by UK Asset Resolution of receivables acquired from rescued banks in the financial crisis, and the use by the British Business Bank of securiti - sation funding tools to fund SME lenders via its ENABLE programme. 4.13 Entities Investing in Securitisation A wide variety of investors invest in securitisa - tions, including banks, pension funds and their asset managers, insurance companies and – pri - marily in respect of mezzanine tranches – private credit funds. Investors are required to conduct due diligence on securitisations before they invest, with pre - scribed rules for this set out in the FCA and PRA Rules. This includes a requirement to ensure that securitisations themselves comply with a num - ber of provisions of the UK Securitisation Reg - ulations Framework (to the extent applicable), such as reporting requirements. The extent to
which this restricts UK investors from investing in third-country securitisations has been subject to some debate, and is subject to further review and potential reform by the FCA and PRA. In fact, the due diligence regime under the UK Securitisation Regulations Framework is now more flexible than under the EU Securitisation Regulations in that it does not force UK inves - tors to obtain reporting on UK templates, and so facilitates investment by UK investors in EU deals where reporting is on EU templates. The same flexibility is not included in the EU Securiti - sation Regulations, thus requiring UK issuers to satisfy both UK and EU reporting requirements where there are EU investors. 4.14 Other Principal Laws and Regulations UK GDPR (the onshored version of the EU’s General Data Protection Regulation) and the Data Protection Act 2018 govern the handling of personal data, which must be considered carefully in every transaction. It is a fundamental principle of securitisations that the securitisation structure can outlast the business of the servicer, but a large volume of personal data relating to underlying customers must be made available to a replacement servicer in order for this to occur. It is important to ensure that arrangements in this regard are lawful and operate on an appro - priate basis. For so long as the original servicer remains responsible for servicing the assets, the transfer, holding and processing of personal data by the SPE and any investors are minimised.
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