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The PRA and FCA have opened parallel consultations on reforms to the Senior Managers and Certification Regime, including removing certification checks for around 139,000 people below senior-manager level. Regulators estimate the proposed changes could save firms about £2 billion over 10 years, while keeping pre-approval for key senior roles and maintaining firms’ responsibility for staff conduct.
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have launched consultations on plans to simplify the Senior Managers and Certification Regime, including ending annual certification checks for around 139,000 staff below senior-manager level. The regulators estimate the proposed reforms could save firms about £2 billion over 10 years, while retaining pre-approval for key senior posts and keeping firms responsible for staff competence and conduct.
The proposals would remove regulator pre-approval for a range of roles, including chief actuaries and chairs of risk and audit committees. Firms would instead notify the regulators of appointments and remain responsible for checking that candidates are fit and proper. The PRA and FCA would retain the power to require pre-approval for otherwise notified roles in high-risk cases.
The plans would also remove the Certification Regime and its related administrative requirements for about 139,000 people below senior-manager level. Regulators propose raising the threshold for reporting conduct-rule breaches involving most staff in those roles and streamlining conduct-rule training requirements, allowing firms to focus on more serious misconduct.
Pre-approval and fit-and-proper checks would continue for certain senior roles, including chief executives, chief financial officers and chairs. The regulators say the standards of individual accountability and conduct will remain unchanged, even where their advance approval is no longer required.
Fewer Checks, Firm Accountability Remains
If adopted, the proposals would change how firms appoint and oversee a substantial number of employees. Removing routine approval steps and annual certification checks could reduce administrative work and allow firms to appoint some people more quickly. The regulators’ estimate of £2 billion in savings over 10 years is a projection, not a reported saving already achieved.
The change would not transfer responsibility for staff conduct from firms to regulators. Employers would still need to check that employees are suitable and competent and meet conduct standards. For staff and customers, the central question is how firms will maintain effective oversight when fewer roles are subject to regulator approval or formal certification.
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The Regime’s Reform Timeline
The SM&CR was introduced 10 years ago to promote accountability among senior decision-makers in regulated financial services firms. The PRA and FCA describe these proposals as the second and most significant phase of reform. Their stated aim is to reduce administrative requirements while preserving individual accountability, including for misconduct affecting the wider public.
Earlier changes took effect in April 2026. They included longer timelines for some senior-manager applications after unexpected or temporary changes, removing duplicate certification requirements for overlapping functions, and increasing enhanced-firm thresholds by 30%. The regulators’ new consultations build on those changes rather than replacing the regime in one step.
The PRA says its proposals would cut its SM&CR pre-approvals by 43% and halve the overall burden of its regime. For FCA enhanced solo-regulated firms, the FCA estimates around 15% of applications would move to notification and two SMF roles would be removed, producing a further 19% reduction. These are regulator estimates tied to particular parts of the proposed changes.
“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.”
— Katharine Braddick, PRA chief executive and deputy governor for prudential regulation
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Consultation Could Change Final Rules
The proposals are not final rules. The consultations invite responses on all aspects of the reforms and close on 22 January; the regulators say policy is expected in 2027. Some measures require legislative change, and the regulators say they are consulting now so they can move quickly once legislation is passed.
It is not yet clear which proposals may be amended after feedback, when legislation will be passed, or when any resulting changes would take effect. The source announcement does not set out how firms are expected to adapt their internal controls in detail. The PRA also reports that 98% of applications were determined within its proposed two-month statutory deadline, compared with 98.3% in the FCA’s latest quarter; those figures describe application-processing performance, not the effect of the proposed reforms.
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Responses Due by 22 January
Firms, employees and other interested parties can respond to the PRA and FCA consultations through the regulators’ published consultation materials. The regulators are seeking feedback on how to make the regime more proportionate while maintaining high standards of accountability and conduct.
After the consultation period, the regulators expect to publish policy in 2027. Proposals that need legislation will depend on that legislative process before implementation. Until final rules and any required legislation are in place, the existing requirements remain the operative framework.
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Key Questions
What are the regulators proposing?
The PRA and FCA propose removing pre-approval for some roles, ending certification requirements for around 139,000 staff below senior-manager level, and changing breach-reporting and training requirements.
Which roles would still need regulator pre-approval?
Some senior roles, including chief executives, chief financial officers and chairs, would continue to require pre-approval and fit-and-proper checks. Regulators could also require approval for otherwise notified roles in high-risk cases.
Would firms still be responsible for employee conduct?
Yes. Under the proposals, firms would remain responsible for ensuring employees are competent, suitable and meeting conduct standards, including where regulator pre-approval is removed.
How much do regulators expect firms to save?
The regulators estimate the proposals could save firms about £2 billion over 10 years. This is a forecast, not a confirmed saving.
When could the changes take effect?
Consultations close on 22 January, and policy is expected in 2027. Some reforms require legislation, so the implementation date is not yet clear.
Source: primary
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