FCA and PRA cut senior manager regime red tape to help boost growth

In the first phase of reforms to the Senior Manager Certification Regime (SM&CR), the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are proposing to streamline the regime to make it more effective and efficient and to drive growth in financial services.

As the government consults on legislative changes to the regime - including removing the Certification Regime and increasing flexibility for the regulators to reduce the number of senior management functions (SMFs) which require pre-approval - the regulators' proposals aim to make the regime less onerous on firms, while continuing to protect consumers and markets, and the safety and soundness of firms.  

The consultations, which have been informed by the regulators' 2023 Discussion Paper, includes proposals to:

• Give firms more time and flexibility to submit applications for approving new senior managers when there has been an unexpected or temporary change. 
• Strip out duplication where the same individuals are certified for separate functions, which would reduce the number of certification roles by 15%.
• Provide guidance on how to streamline the annual checks firms need to undertake to certify individuals are ‘fit and proper' to do their role. 
• Allow more time for firms to report updates to senior manager responsibilities.
• Increase how long criminal record checks for senior manager applications are valid for, prior to application submission.
• Help firms to better understand the definition of certain SMF roles.
• Give firms more time to update the directory, which lists certified staff. 

The SM&CR holds individual senior managers in financial firms accountable for their conduct and competence. 

Nikhil Rathi, FCA chief executive, 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 approach to outcomes-based regulation, while maintaining the high standards the regime has set.”

Sam Woods, chief executive of the PRA and deputy governor for prudential regulation at the Bank of England, said:

“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.”

This consultation will close on 7 October 2025. 

Notes to editors: 

1. The SM&CR ensures accountability among senior managers within financial services firms and maintains standards of behaviour and competence across the board.
2. Read the FCA's Senior Managers & Certification Regime review consultation paper.
3. Read the PRA's Senior Managers & Certification Regime review consultation paper.
4. HM Treasury has also launched a consultation to support a further phase in which the regulators would be able to make additional changes if legislation is made. This could include developing a more proportionate replacement for the Certification Regime; significantly reducing the number of roles requiring regulatory pre-approval; and further streamlining the assessment process. Read HM Treasury's consultation paper.
5. In December 2022, the government announced, as part of the Edinburgh Reforms, that the Treasury, FCA and PRA would begin reviews of the SM&CR. In March 2023, the FCA published a Discussion Paper with the PRA, inviting views on the regime's effectiveness, scope and proportionality, and on potential improvements that could be made. The Treasury launched a Call for Evidence on the regime alongside this.
6. This consultation from the regulators includes phase 1 proposals only. Further phase 2 reforms will be explored as a second stage of work in due course, making use of the additional flexibilities that legislative amendments would provide. To help accelerate through phase 2, the FCA is seeking views now on potential changes for phase 2 as well as inviting any other ideas of reducing burden while maintaining the benefits of the SM&CR.