UK Regulator Set to Toughen Private Credit Reporting Standards
By Phoebe Seers and Nell Mackenzie
FCA Plans Overhaul of Private Credit Reporting
LONDON, May 14 (Reuters) - Britain's financial regulator is preparing to force private credit managers to report more detailed and tailored data, sources told Reuters, as it seeks to increase scrutiny of the fast-growing and still opaque industry.
The Financial Conduct Authority has told alternative asset managers, a sector that includes private credit and equity, about an overhaul of reporting requirements, the sources said.
Granular Data Requirements and Industry Response
The regulator's plan could see some private credit firms forced to disclose granular, loan-level data on a regular basis - prompting pushback from the industry - or less onerous fund-level data, the sources said, speaking on the condition of anonymity because the discussions were private. These firms currently report broad data such as turnover and trading volumes.
The planned overhaul, which was first reported by the Financial Times, comes as regulators globally grapple with risks posed by the $3.5 trillion private credit sector, which involves the lending to mid-market companies by investment funds. Scrutiny has increased following several private-market related borrower failures in the U.S. and UK that have left creditors facing losses.
Recent Market Developments
Private credit managers including KKR, Apollo, BlackRock and Blue Owl have in recent weeks also been forced to cap investor redemptions for some of their funds as investors exit.
Regulatory Context and Stress Testing
UK regulators have set the stage for increased reporting, with the Bank of England this year stressing how the "opacity" of the market could trigger a loss of confidence. The BoE has launched a stress test of the private credit and equity sectors, with interim results due later this year.
The FCA plans to consult formally with the industry on its proposals in the coming months, the sources said.
FCA’s Official Statement
An FCA spokesperson told Reuters that "improving how we collect data so it is timely, accurate and proportionate will maintain the UK’s position as a world-leading asset management centre."
"Better data means we can supervise risks effectively, support market confidence and identify opportunities for growth."
Industry Opposition to Loan-Level Data
INDUSTRY OPPOSED TO LOAN-LEVEL DATA
All alternative investment fund managers, including private credit, private equity and hedge funds, currently report to the FCA using a template known as Annex IV.
Annex IV Reporting and Proposed Changes
The EU‑era template, introduced in 2013, requires alternative managers to report metrics such as turnover, trading volumes, leverage and exposures, typically semi‑annually or annually, with some larger or riskier firms filing quarterly.
Annex IV "will be reformed in a pretty significant manner," one of the sources with knowledge of the proposals said.
Industry Concerns and Preferences
The industry would be "extremely opposed" to reporting very granular, loan-level data on an ongoing basis, the source said, calling it a "potential nightmare" for firms with liquid strategies in which positions change regularly.
The industry preference, they added, would be to report portfolio-level metrics and broad risk exposures.
Future Regulatory Direction
The second source with knowledge of the plans said the FCA was likely to use the BoE stress test as a "starting point" for ongoing requirements.
Global Regulatory Developments
Other regulators are adapting reporting demands. The U.S. in April unveiled plans to raise the threshold at which enhanced disclosures are required from alternative asset managers, reducing the reporting burden for most.
The Financial Stability Board, in its first in-depth review into private credit, this month flagged the lack of granular fund and loan-level data as a challenge faced by authorities.
(Reporting by Phoebe Seers and Nell Mackenzie; Editing by Tommy Reggiori Wilkes, Alexandra Hudson)
