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The PRA and FCA have launched consultations proposing substantial changes to the Senior Managers and Certification Regime, including removing certification checks for about 139,000 staff and shifting some senior-role approvals to firm notifications. The regulators estimate the reforms could save firms around £2 billion over 10 years while retaining accountability requirements. The consultations close on 22 January, and policy is expected in 2027.
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have launched parallel consultations on a major proposed streamlining of the UK’s Senior Managers and Certification Regime (SM&CR), including removing annual certification requirements for about 139,000 employees. The regulators estimate the package could save financial firms around £2 billion over 10 years, while keeping individual accountability and conduct standards in place.
Under the proposals, firms would no longer need to obtain regulators’ advance approval for a range of roles, including chief actuaries and chairs of risk and audit committees. Instead, firms would notify regulators of appointments and remain responsible for deciding whether candidates are fit and proper. Pre-approval would continue for certain senior positions, including chief executives, finance chiefs and chairs; regulators could also demand prior approval for other roles in high-risk cases.
The package would remove the Certification Regime and related administrative requirements for approximately 139,000 people below senior manager level. Those employees would no longer be subject to annual certification checks or inclusion on the Financial Services Register through this regime. The regulators also propose raising the threshold for reporting conduct-rule breaches by most staff below senior manager level and streamlining related training requirements.
The PRA and FCA say firms would still have to ensure employees remain competent and suitable and meet appropriate conduct standards. The regulators’ stated aim is to reduce administration without weakening accountability. The consultations invite feedback on all aspects of the proposals and are open until 22 January; the regulators expect to publish policy in 2027.
Fewer Checks, Firm-Level Responsibility
The changes could shift a substantial amount of day-to-day oversight from regulators’ approval processes to firms’ own appointment and employee-assessment systems. Firms may gain more flexibility when hiring for roles moving from pre-approval to notification, and fewer routine certification tasks could free staff and resources for other work. The regulators link those potential savings to investment, innovation and UK growth, but those outcomes are their stated rationale rather than a demonstrated result.
For employees, the proposed removal of annual certification and register requirements would change how many roles are supervised and documented under SM&CR. It would not, according to the regulators, remove firms’ responsibility to assess staff or change the accountability standards that apply. The balance between reducing administrative work and maintaining effective oversight will be a central issue in consultation responses.
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A Second Phase of SM&CR Reform
The SM&CR was introduced 10 years ago to strengthen accountability among senior decision-makers in regulated financial firms. The new consultations are described by the regulators as the second and most significant phase of reform. They follow changes made in April 2026, including longer timelines for some senior-manager applications after unexpected or temporary changes, removal of duplicate certification requirements for overlapping functions, and a 30% increase in enhanced-firm thresholds for larger firms.
The regulators’ estimates indicate a material reduction in some approval and compliance processes. The PRA expects its SM&CR pre-approvals to fall by 43% and says the overall burden of its regime would be halved. For FCA enhanced solo-regulated firms, where fewer senior-manager functions apply, 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 projections tied to the proposals, not changes already in force.
“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 Will Shape Final Rules
The proposals are not yet final rules. Responses could affect their scope or design, and some reforms require legislation before they can be implemented. The source announcement does not specify when any required legislation will be introduced or when each change would take effect.
It is also not yet clear how the removal of certification requirements would alter firms’ internal processes in practice, or what safeguards and reporting arrangements would apply after the proposed changes. The £2 billion saving estimate is a projection over 10 years; the announcement does not provide a breakdown of how the savings would be distributed among firms.
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Responses Due by 22 January
The PRA and FCA are seeking responses to their parallel consultations until 22 January. They will use feedback to develop their policy, which they expect to publish in 2027. Because some proposals require legislative change, implementation timing will also depend on the progress of that legislation.
Until final rules are made and take effect, the existing SM&CR requirements remain the applicable regime. Firms and affected employees will need to distinguish the proposals from current obligations while the consultations and any later legislative process proceed.
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Key Questions
What are the regulators proposing to change?
The PRA and FCA propose removing the Certification Regime for about 139,000 staff below senior manager level, shifting approval for some roles to notifications, and changing conduct-breach reporting thresholds and training requirements.
Will all senior managers stop needing regulator approval?
No. Certain roles, including chief executives, finance chiefs and chairs, would still require advance regulatory approval. Regulators could also require pre-approval for other roles in high-risk cases.
Are the proposed changes in force now?
No. The measures are proposals in consultations, not final rules. Some also require legislative change before they can be implemented.
How much do the regulators expect firms to save?
The PRA and FCA estimate the proposals could save firms around £2 billion over 10 years. This is a forecast, not a reported saving already achieved.
When will the consultations close?
The consultations are open until 22 January. The regulators expect to publish policy in 2027, while the timing of implementation remains dependent on final decisions and any required legislation.
Source: primary
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