In the first phase of reforms to the Senior Manager Certification Regime (SM&CR), the FCA and PRA are proposing to streamline the regime to make it more efficient and to drive growth in financial services.
The SM&CR holds individual senior managers in financial firms accountable for their conduct and competence.
The changes come as the government consults on legislative changes to the regime - including removing the Certification Regime and increasing flexibility for the regulators to reduce the number of senior management functions (SMFs) which require pre-approval.
The consultations includes proposals to:
• Give firms more time and flexibility to submit applications for approving new senior managers when there has been an unexpected or temporary change.
• Strip out duplication where the same individuals are certified for separate functions, which would reduce the number of certification roles by 15%.
• Provide guidance on how to streamline the annual checks firms need to undertake to certify individuals are ‘fit and proper’ to do their role.
• Allow more time for firms to report updates to senior manager responsibilities.
• Increase how long criminal record checks for senior manager applications are valid for, prior to application submission.
• Help firms to better understand the definition of certain SMF roles.
• Give firms more time to update the directory, which lists certified staff.
The regulators say the proposals aim to "make the regime less onerous on firms, while continuing to protect consumers and markets, and the safety and soundness of firms".
The consultation will close on 7th October 2025.
Nikhil Rathi, chief executive of the FCA, commented: “Integrity and accountability at the top matter, which is why there is widespread support for the Senior Managers and Certification Regime. We are proposing streamlining the rules, so they work better for industry and support competitiveness and our approach to outcomes-based regulation, while maintaining the high standards the regime has set.”
Sam Woods, chief executive of the PRA and deputy governor for prudential regulation at the Bank of England, said: “High standards of accountability are important for maintaining confidence in our financial services industry. Today’s changes will reduce the burden of the Senior Managers and Certification Regime without diluting accountability, and we will work with the government on further reforms.”
Billy Bradley, financial services Partner with law firm CMS, commented: “The proposed changes to the Regime are tweaks rather than a rethink. Scrapping Certification would be a major shift, but that needs legislation and could leave more staff outside formal fit and proper checks. But today’s announcement is striking timing - some relief offered only days after the FCA pushed to expand the Conduct Rules to capture non-financial misconduct, a move many see as beyond the Regime’s core remit.”
