UK regulators propose scrapping the Certification Regime in Senior Managers overhaul

The UK Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) opened parallel consultations on 22 October on the second phase of their review of the Senior Managers and Certification Regime (SM&CR). The headline proposal is to remove the Certification Regime altogether.

What would change

According to the Bank of England’s announcement, around 139,000 individuals below senior manager level would no longer face annual certification checks or appear on the Financial Services Register. The FCA would also retire its Directory of certified and assessed persons.

The FCA’s consultation paper, CP26/37, lists the other main proposals:

• fewer Senior Management Function (SMF) applications, by removing some functions and turning others into roles that firms simply notify to the regulator;
• a streamlined SMF application process;
• higher thresholds, so fewer firms fall into the Enhanced regime;
• no more ongoing submissions of Statements of Responsibilities and Management Responsibilities Maps;
• simpler Conduct Rule training and a higher threshold for reporting Conduct Rule breaches for most staff below senior manager level.

CEOs, CFOs and chairs would still need regulator approval, including fit and proper tests, before appointment, and the regulators could still require pre-approval for notified roles in high-risk cases. The Bank of England says the changes are expected to save firms around £2 billion over a 10-year period.

Who it affects

The FCA says the paper applies to all firms already in scope of the SM&CR, including third-country branches, and to firms due to come into scope, such as cryptoasset firms. That covers UK-authorised brokers and trading platforms in every market. Crypto firms seeking authorisation are pointed to PS26/13 and to the FCA’s perimeter guidance consultation, CP26/36.

For clients, nothing changes in how to verify a firm: its FCA authorisation can still be checked on the Financial Services Register, as explained in our guide on how to check a broker’s licence. Certified staff below senior manager level would no longer be listed there.

What happens next

Some of the reforms need changes to legislation. The FCA’s paper refers to the Financial Services and Markets Bill, which would move many SM&CR requirements out of statute and into the regulators’ rules. Comments are due by 22 January 2027, and the FCA expects to publish final rules in a Policy Statement in the first half of 2027.