The FCA and PRA have launched a joint consultation proposing targeted reforms to the Senior Managers & Certification Regime, aiming to reduce regulatory burden without compromising accountability. Measures include easing approval timelines, reducing duplication, and offering clearer guidance on key compliance requirements.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a series of reforms to the Senior Managers & Certification Regime (SM&CR), in a move designed to ease the compliance burden on regulated firms while preserving core principles of accountability and high standards in financial services.
In the first phase of a wider reform effort, the regulators are consulting on changes that would simplify how firms manage senior manager approvals, certification responsibilities, and reporting obligations under the existing regime.
The proposals follow a 2023 discussion paper and sit alongside HM Treasury’s ongoing consultation on potential legislative changes to enable further reform.
Among the key changes proposed:
The SM&CR was introduced to improve accountability across financial services following high-profile governance failures. While widely supported, it has attracted criticism from firms—particularly smaller entities—for being too onerous in practice.
Nikhil Rathi, Chief Executive of the FCA, said:
“Integrity and accountability at the top matter, which is why there is widespread support for the Senior Managers and Certification Regime. We are proposing streamlining the rules so they work better for industry and support competitiveness and our outcomes-based regulation, while maintaining the high standards the regime has set.”
Sam Woods, PRA Chief Executive and Deputy Governor for Prudential Regulation at the Bank of England, added:
“High standards of accountability are important for maintaining confidence in our financial services industry. Today’s changes will reduce the burden of the Senior Managers and Certification Regime without diluting accountability, and we will work with the government on further reforms.”
The consultation runs until 7 October 2025, with a second phase of reform contingent on legislative flexibility being introduced by HM Treasury. Potential future changes may include removing the Certification Regime altogether, reducing the number of SMFs requiring pre-approval, and refining the conduct rules framework.
Industry commentary on the reforms has so far been cautiously optimistic.
Jill Lorimer, Head of Financial Services Regulatory at Kingsley Napley LLP, described the package as “thoughtful,” noting that the 12-week rule proposal in particular would address a long-standing anomaly:
“Firms finding themselves in breach for no reason other than delays on the part of the regulator in determining approval applications… this means that firms can take the time it needs to find the right candidate for the role.”
Lorimer also welcomed guidance on regulatory references and clarification around the conduct rules, which she said would support fairness and proportionality in enforcement.
Imogen Makin, counsel at WilmerHale, noted the reforms align with the FCA’s broader 2025–2030 strategy:
“While this consultation marks a helpful first phase, firms should monitor subsequent reforms closely. Phase 2 changes are likely to be significant and, while creating work in the short term, could reduce long-term compliance burdens.”
While the current proposals stop short of sweeping structural changes, they signal a more flexible regulatory tone and intent to improve proportionality—particularly for smaller firms—without stepping away from the accountability principles that underpin the regime.
The industry now has until October to weigh in, after which the regulators are expected to finalise and implement phase one, setting the stage for more ambitious change in phase two.
