HM Treasury (HMT), the FCA, and the PRA have published long awaited consultations proposing reforms to the Senior Managers & Certification Regime (SM&CR). These consultations are interconnected and form a package of proposed changes to overhaul how accountability, governance, and conduct are managed in UK financial services firms. As such they need reading in conjunction with each other and can’t be read in isolation, so we’ve done the hard work for you and brought the key points together in this special newsletter.
Together these consultations seek to balance strengthening standards with reducing burdens, so the SMCR remains fit for purpose.
Core Objectives
- Proportionality: Making requirements better aligned to firm size, business model, and risk profile.
- Efficiency: Cutting duplication, delays, and unnecessary annual processes – especially in SMF approvals and certification.
- Competitiveness: Reducing regulatory friction supports the UK’s global financial services role, attracting top talent and investment.
- Accountability: Not diluting the regime’s core principle that individuals at every level must be fit, proper, and accountable for their actions.
Key Themes Across All Papers
- The proposals intend to radically streamline the SMCR, aiming to cut related regulatory burdens by half.
- There is a two-phase approach: initial streamlining within current law, followed by deeper changes if Parliament amends legislation needed to achieve all the desired outcomes.
- The government’s headline proposal is to take the Certification Regime out of primary legislation replacing it with new – more proportionate – requirements in the PRA Rulebook and FCA Handbook at the proper time.
- Fewer prescribed roles pre-approved by the FCA/PRA; for lower-risk Senior Manager roles, pre-approval is likely to be replaced by notification.
- More flexibility around the 12-week rule (temporary coverage of SMF roles), reporting content and deadlines, and updating Statements of Responsibilities.
- Fewer certification roles – likely a drop of around 15% initially.
Why This Matters
- The proposed changes will impact how firms appoint, certify, and manage staff across all regulated roles.
- Core aims remain: cultural improvement, reduced risk of harm, and clarity of individual responsibilities.
Summary for Firms
These reforms mean less red tape but ongoing clarity and rigour. Firms will need to shift from annual box-ticking to smarter, ongoing oversight of key staff. Early engagement with an experienced regulatory consultancy will ensure you can adapt confidently to the new regime and avoid compliance failings.
Get in touch with the team at Leaman Crellin to discuss how we can help you with this and other compliance requirements.
