HM Treasury, the FCA and the PRA are currently consulting on a number of proposed changes to the Senior Manager & Certification Regime (SM&CR), with consultations due to close in early October. The proposed changes are largely aimed at simplifying requirements and reducing the regulatory burden on firms, while maintaining effectiveness in the regulatory regime.
Reforms will take place in two phases. First, the FCA and PRA are expected to publish the final versions of updated rules in mid-2026. Second, legislative changes to the regime, led by HM Treasury with input from both the FCA and the PRA, will likely take longer to be formulated and implemented.
Key Proposed Reforms Across the Two Phases of Reform Include:
- Streamlining the SMF (Senior Management Function) assessment process by reviewing the documents needed and the systems required.
- Relaxing rules in relation to the 12 week period that SMFs can be covered in certain circumstances by someone who is not themselves approved. This will be done in two phases: (i) allowing an individual to carry out an SMF without prior regulatory approval provided that their firm submits an application for approval within the 12 week period, and allowing them to continue in that role beyond 12 weeks until the application is determined by the regulator, and (ii) expanding the scope of the 12-week rule to accommodate longer or more complex transitions.
- For those applying to perform SMFs, the validity of criminal record checks will be extended from 3 to 6 months. New checks will not be required for internal SMF moves, provided that the firm has a current fitness and property assessment on file for the relevant individual.
- The list of SMFs will be tailored more proportionately to firm size and risk profile and the regulators will consider designating certain SMF roles as not requiring pre-approval (relying instead on firm-led F&P assessments and notification).
- Reducing the amount of time firms have to provide regulatory references from 6 to 4 weeks.
- Clarifying the scope of misconduct that should be disclosed in regulatory references.
- Clarify conduct rule guidance and streamline reporting rules for conduct rule breaches.
- Simplify rules on statements of responsibilities, including increasing the amount of time firms have to update statements.
You can read the full consultation documents at the links below:
