Regulators unveil plans to simplify Senior Manager and Certification Regime
UK regulators propose streamlining the Senior Managers and Certification Regime to reduce burdens while maintaining accountability, aiming to save firms £2 billion over a decade.
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have launched parallel consultations to simplify the Senior Managers and Certification Regime (SM&CR), introduced a decade ago to enforce accountability among senior decision-makers in financial services. The proposals aim to remove unnecessary administrative burdens while preserving high standards of individual accountability and conduct, including accountability for misconduct affecting society. Firms would save approximately £2 billion over 10 years, allowing them to redirect resources toward customer outcomes, talent recruitment, innovation, and investment to support UK growth and competitiveness.
Key changes include raising the conduct rule breach reporting threshold for most staff below senior manager level and streamlining Conduct Rule training requirements. Senior roles such as CEOs, CFOs, and Chairs will still require regulator pre-approval, including fit and proper tests, while regulators may require pre-approval for other notified roles in high-risk cases. Firms remain responsible for ensuring employees meet competence, suitability, and conduct standards, with accountability maintained for all staff regardless of pre-approval status.
The PRA and FCA consultations, open until 22 January, seek feedback on making the regime more proportionate while upholding accountability. Legislative changes are required for some reforms, and the regulators aim to implement changes swiftly once legislation is passed. Policy decisions are expected in 2027, aligning with the PRA’s five-year strategy unveiled alongside the proposals.
Katharine Braddick, Deputy Governor for Prudential Regulation and PRA CEO, stated the regime remains essential but should reduce unnecessary checks for less critical roles to free firms for growth-focused activities. Sarah Pritchard, FCA Deputy CEO, emphasized that while accountability standards will remain high, the regime can be streamlined to support a more efficient regulatory approach.