The UK Financial Services Authority has published guidance on the role of the asset pool monitor in Regulated Covered Bonds (RCBs) following a request from the market, and is seeking feedback on the guidance.

The FSA said that the purpose of the guidance – published as a thematic overview on the RCB regime – is to set out further guidance on the scope of inspections the asset pool monitor is required to conduct every 12 months on issuers’ compliance with RCB regulations, as well as on the annual report the monitor is required to prepare on the quality of cover pool assets and steps taken by issuers to comply with related regulations.

The FSA said that it expects the guidance to bring more consistency to audit reports, which it said vary a lot across RCB issuers, with greater consistency allowing cross-comparisons across RCB programmes.

“While the FSA wish to leave some flexibility to APMs [asset pool monitors] and will not be prescriptive in terms of, for example, how the quality of assets should be inspected, APMs are expected to provide us with a proposal outlining how this can be achieved best,” said the FSA. “This may well be done through the consultation process on this guidance.

“We will reflect on the proposals made and assess whether one could be used consistently across RCB programmes.”

Responses to the consultation can be submitted until 14 September. The guidance can be found here.