News release
The number of financial services roles required to face enhanced checks from regulators will fall significantly under proposals that will support growth. The changes are expected to save firms around £2 billion over a 10-year period.
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have today announced parallel consultations on proposals to significantly streamline the Senior Managers and Certification regime (SM&CR). The SM&CR was introduced 10 years ago to instil a culture of accountability among senior decision-makers in regulated firms.
Under the proposals, unnecessary burdens will be removed while high standards of individual accountability and conduct will remain unchanged, including the regulators’ commitment to ensuring that individuals are accountable for misconduct that affects society as well as their employers.
The changes will allow firms to focus more resources to ensure good customer and market outcomes, recruit and appoint talent, and prioritise innovation and investment, all supporting UK growth and competitiveness.
The key changes to the regime include:
- Regulator pre-approval will be removed for a range of regulatory functions, including Chief Actuaries and Chairs of Risk and Audit Committees.
- Firms will instead notify regulators of these appointments directly, gaining speed and flexibility while remaining responsible for ensuring candidates are fit and proper.
- Removing the Certification Regime and associated administrative requirements for around 139,000 individuals below senior manager level to be subject to annual certification checks and appear on the Financial Services Register.
Raising the conduct rule breach reporting threshold for most staff below senior manager level and streamlining Conduct Rule training requirements. This enables firms to better target more serious misconduct.
Certain Senior Manager roles, such as CEOs, CFOs and Chairs, will continue to require regulator pre-approval, including fit and proper tests, before appointment. Regulators will also be able to require pre-approval for otherwise notified roles in high-risk cases. Firms will remain responsible for ensuring their employees remain competent, suitable and meet appropriate standards of conduct, and those no longer requiring pre-approval will continue to be held to the same level of accountability as before.
Katharine Braddick, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said: “The Senior Managers Regime is an essential part of the UK’s regulatory framework. 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, giving firms more time to invest in growth-focused activities and greater flexibility in onboarding senior talent.”
Sarah Pritchard, Deputy CEO, said: “SM&CR has delivered significant improvements in accountability and governance across financial services. We remain committed to ensuring individual accountability and good standards of behaviour across financial services. But we can achieve the same impact with a more streamlined regime, supporting our aim to be a smarter regulator.”
Some of the proposed reforms require legislative change. By consulting now, the FCA and PRA will be ready to implement reforms quickly once legislation is passed.
The consultations are now open until 22 January, seeking views on how the regime can be made more proportionate while maintaining high standards of individual accountability and conduct. The consultations invite feedback on all aspects of the proposals with policy expected to follow in 2027.
This was announced as part of Mansion House speeches delivered by Katharine Braddick and Nikhil Rathi. In her speech, Katharine unveiled a five-year strategy for the PRA designed to transform the regulator, focusing on the resilience of the financial sector, the regulator’s growth and competitiveness objective, innovating with data and technology and boosting transparency.
Notes to editors
- Read and engage with the PRA’s consultation.
- Read and respond to the FCA's consultation, and review the accompanying cost-benefit analysis.
- These consultations are the second and most significant phase of SM&CR reform. They build on changes in April 2026, including longer timelines for senior manager applications following unexpected or temporary changes, removal of duplicate certification requirements for overlapping functions, and a 30% increase in enhanced firm thresholds for larger firms.
- The reforms are expected to reduce PRA SM&CR pre-approvals by 43% and halve the overall burden of the PRA regime. For FCA Enhanced solo-regulated firms where fewer SMFs apply, around 15% of applications would move to notification and 2 SMF roles would be removed, saving a further 19%. The PRA’s latest quarterly data shows that 98% of applications were determined within the proposed new two-month statutory deadline, compared with 98.3% in the FCA’s most recent quarterly metrics.
- The proposals build on wider PRA and FCA initiatives to support growth and competitiveness, including reforms to the ring-fencing regime to enable more flexible sharing of operational resources, proposals to index over 100 PRA thresholds to nominal GDP growth, and FCA reforms to strengthen the attractiveness of UK capital markets and support investment, and joint PRA/FCA initiatives to help innovative firms start up, scale up and compete internationally.
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