The UK Regulated Covered Bond regime could be updated soon after HM Treasury yesterday (Wednesday) said in its budget that it will, with the Financial Services Authority, publish a review of the framework.

“The review will consult on measures to enhance the attractiveness of UK covered bonds to investors,” read the budget, “making it easier for banks and building societies to raise funding in order to lend to households and businesses.”

The Financial Services Authority is understood to have been consulting with investors about measures to this end and could come out with new secondary regulations for UK issuers. Amendments to primary legislation are not anticipated, while the Bank of England has already introduced new disclosure requirements for securitisation and covered bond issues.

The issue of disclosure came into focus this week after an M&G fund manager complained that some cover pools were opaque, something that has been raised by several investors new to the market recently.

However, the issue is one that the Covered Bond Investor Council, which operates under the auspices of the International Capital Markets Association, has been addressing. For example, it is working on national templates that would be available for all investors and allow comparisons between different issuers.

One market participant said that UK issuers were supportive of such measures.

“The UK is right at the leading edge on this matter,” he said. “You can argue about whether it is necessary for covered bonds, given the dynamic cover pools and eligibility criteria, but UK issuers are already doing the work.

“And if a lot of investors, particularly non-traditional ones, are asking to see what’s in the cover pool, I don’t see why UK issuers would be against that.”