Regulators Unveil Plans To Simplify Senior Manager And Certification Regime

TL;DR

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The FCA and PRA have opened parallel consultations on proposals to simplify the Senior Managers and Certification Regime while retaining individual accountability. Plans include removing certification requirements for about 139,000 staff and shifting some senior appointments from regulator pre-approval to firm notification; the regulators estimate the changes could save firms around £2 billion over 10 years.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have launched consultations on plans to simplify the UK’s Senior Managers and Certification Regime (SM&CR), proposing to remove certification requirements for about 139,000 staff and reduce regulator pre-approval for some roles. The regulators say the reforms would cut administrative work while keeping individual accountability and conduct standards in place, and estimate they could save firms around £2 billion over 10 years.

Under the proposals, firms would notify regulators directly about appointments to a range of roles that currently require advance approval, including Chief Actuaries and Chairs of Risk and Audit Committees. The firms would remain responsible for checking that candidates are fit and proper. Regulators could still require pre-approval for otherwise notified appointments in high-risk cases.

The plans would also remove the Certification Regime and its associated administrative requirements for roughly 139,000 people below senior manager level. Those staff would no longer face the regime’s annual certification checks or appear on the Financial Services Register on that basis. The regulators also propose raising the threshold for reporting conduct-rule breaches involving most staff below senior manager level and simplifying related training requirements.

Some senior roles would continue to require regulatory approval before appointment. The regulators name chief executives, chief financial officers and chairs among the roles that would remain subject to pre-approval and fit-and-proper checks. Firms would retain responsibility for ensuring staff are competent, suitable and meet conduct standards, including those in roles moved to a notification process.

Fewer Checks, Firm Accountability Remains

The changes would alter who is checked directly by regulators before appointment and how firms document conduct and certification across their workforces. For firms, the proposed reduction in approvals and recurring checks could free staff time and reduce compliance costs. The regulators’ estimate of £2 billion in savings over 10 years is a forecast, not a realised saving.

The reforms also shift more of the day-to-day screening and oversight of affected employees onto firms. The FCA and PRA say accountability standards would not change, but the practical balance between regulatory checks and firms’ own controls would. That makes the consultation relevant to firms preparing for recruitment, governance and compliance changes, as well as to employees whose roles may no longer be covered by annual certification.

The regulators link the proposals to their aims for growth and UK competitiveness, arguing that less administrative work could let firms direct more resources toward customer and market outcomes, recruitment, innovation and investment. Those are stated aims; the consultations have not yet established the effects the reforms will have in practice.

A Second Phase of SM&CR Reform

The SM&CR was introduced 10 years ago to promote accountability among senior decision-makers in regulated financial firms. The current proposals form the second and most substantial phase of reforms, following changes made in April 2026.

Those earlier changes included longer timelines for senior-manager applications after unexpected or temporary changes, removal of duplicate certification requirements for overlapping functions, and a 30% increase in enhanced-firm thresholds for larger firms. The new consultations would go further by changing approval and certification requirements across a broader set of roles.

The PRA says its proposals would reduce its SM&CR pre-approvals by 43% and halve the overall burden of its regime. For FCA enhanced solo-regulated firms, where fewer senior-manager functions apply, the regulator says around 15% of applications would shift to notification and two SMF roles would be removed, producing a further 19% saving. These are regulator estimates and apply to the stated categories, rather than all firms or applications.

“These proposals keep checks in place for the most important roles, meaning individuals are accountable for their actions, but reduce the administrative burden where it isn’t needed.”

— Katharine Braddick, PRA deputy governor for prudential regulation and chief executive

Consultation Could Change the Proposals

The reforms are proposals, not final rules. The FCA and PRA consultations remain open until 22 January, and regulators are seeking feedback on all aspects of the plans, including how to make the regime more proportionate while preserving accountability and conduct standards.

Some changes require legislative action. The regulators say they are consulting now so they can move quickly once legislation is passed, but the source material does not set out a timetable for that legislation or give a final implementation date. Policy is expected in 2027, and the proposals may be amended after responses are considered.

The regulators have not yet provided final rules showing exactly how firms should apply the revised reporting threshold, training requirements or notification arrangements. Nor is the estimated £2 billion saving a guaranteed outcome. The eventual impact will depend on the final measures and how firms implement them.

Responses Due by 22 January

Firms and other interested parties can respond to the parallel FCA and PRA consultations by 22 January. The regulators will use responses to develop their policy, which they expect to publish in 2027.

Some reforms will depend on legislation before they can take effect. Until the final policy and any required legislative changes are in place, firms remain subject to the existing regime and should not treat the proposed notification or certification changes as already active.

Key Questions

What are the FCA and PRA proposing?

They propose reducing pre-approval for some roles, ending SM&CR certification requirements for about 139,000 staff below senior manager level, and changing conduct-breach reporting and training requirements. The plans are under consultation and are not final rules.

Which roles would still need regulator pre-approval?

The regulators say roles including chief executives, chief financial officers and chairs would continue to require pre-approval and fit-and-proper checks. They could also require approval for other roles in high-risk cases.

Would firms still be responsible for staff conduct?

Yes. The regulators say firms would remain responsible for checking employee competence and suitability and maintaining appropriate conduct standards, including for roles no longer requiring pre-approval.

When could the changes take effect?

The consultations close on 22 January, and policy is expected in 2027. Some proposals require legislation, so a final implementation date has not been confirmed.

How much do the regulators expect firms to save?

The FCA and PRA estimate the proposals could save firms around £2 billion over 10 years. This is a forecast, not a guarantee or a saving already achieved.

Source: primary