On 22 April 2026, the UK financial services regulators, the FCA and PRA, published policy statements on reforming the Senior Managers and Certification Regime (‘SMCR‘), following their consultation papers last summer on Phase One reforms.
Most of these reforms came into effect two days later on 24 April 2026 and include:
- Extending the validity period of criminal records checks from 3 to 6 months and no longer requiring criminal record checks for internal or intragroup moves
- Allowing firms 12 weeks to submit a Senior Management Function application rather than 12 weeks to submit and receive approval. The candidate can act in role until the application has been determined
- Giving firms up to 6 months to notify of changes to Statements of Responsibilities and Management Responsibilities Maps
- Reducing the period for firms to respond to requests for regulatory references from 6 to 4 weeks
- Providing guidance on how to deal with an employee suspected of misconduct leaving the firm before the investigation is complete, in terms of their onward regulatory reference
Other further changes take effect on 10 July 2026, such as increasing the thresholds for becoming an Enhanced SMCR firm and removing overlapping multiple certifications under the certification regime.
The aim of these reforms is to increase the efficiency and effectiveness of the SMCR regime and reduce the regulatory burden on firms. Phase Two will consider broader reforms, which may include changes to Senior Manager Functions and the Certification Regime. Whilst many of these changes will primarily impact Compliance professionals, for those in HR in regulated firms, the reduced period for providing regulatory references is noteworthy and something to factor into both recruitment processes and leaver processes, particularly when navigating a reference which is not ‘clean’ due to a potential misconduct issue. In addition, the further guidance on how to deal with employees leaving before investigations are complete into alleged misconduct is welcome, although many firms have been doing in practice what the new guidance says anyway – namely, considering whether the suspected misconduct would be material enough to disclose if it were true, and ensuring they have taken sufficient steps to verify the information before disclosing on a reference. Alongside the incoming guidance on non-financial misconduct (on which you can read further here), it continues to be a year of reform for SMCR and the financial services sector.
