PRA and FCA propose streamlining SM&CR, expect £2bn saving over 10 years

• PRA and FCA open parallel consultations on proposals to significantly streamline the Senior Managers and Certification Regime (SM&CR).
• Regulator pre-approval would be removed for a range of regulatory functions, including Chief Actuaries and Chairs of Risk and Audit Committees.
• The Certification Regime and associated administrative requirements would be removed for around 139,000 individuals below senior manager level.
• CEO, CFO and Chair roles would continue to require regulator pre-approval, including fit and proper tests, before appointment.
• The changes are expected to save firms around £2 billion over a 10-year period.
• Consultations run until 22 January, with policy expected to follow in 2027; some reforms require legislative change.

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) announced parallel consultations on proposals to significantly streamline the Senior Managers and Certification Regime (SM&CR), in a news release published on 22 October 2026. The number of financial services roles required to face enhanced checks from regulators will fall significantly under the proposals, which the regulators said will support growth.

PRA and FCA propose streamlining SM&CR, expect £2bn saving over 10 years

The changes are expected to save firms around £2 billion over a 10-year period, according to the release. The SM&CR was introduced 10 years ago to instil a culture of accountability among senior decision-makers in regulated firms.

Key proposed changes

• Regulator pre-approval will be removed for a range of regulatory functions, including Chief Actuaries and Chairs of Risk and Audit Committees; firms will instead notify regulators of these appointments directly.
• Removing the Certification Regime and associated administrative requirements for around 139,000 individuals below senior manager level to be subject to annual certification checks and appear on the Financial Services Register.
• Raising the conduct rule breach reporting threshold for most staff below senior manager level and streamlining Conduct Rule training requirements.
• Certain Senior Manager roles, such as CEOs, CFOs and Chairs, will continue to require regulator pre-approval, including fit and proper tests, before appointment; regulators will also be able to require pre-approval for otherwise notified roles in high-risk cases.

The release said unnecessary burdens will be removed while high standards of individual accountability and conduct remain unchanged, including the regulators’ commitment to ensuring that individuals are accountable for misconduct that affects society as well as their employers. Firms will remain responsible for ensuring their employees remain competent, suitable and meet appropriate standards of conduct, and those no longer requiring pre-approval will continue to be held to the same level of accountability as before, the release said.

Expected impact on approvals

The reforms are expected to reduce PRA SM&CR pre-approvals by 43% and halve the overall burden of the PRA regime, according to the release. For FCA Enhanced solo-regulated firms where fewer SMFs apply, around 15% of applications would move to notification and 2 SMF roles would be removed, saving a further 19%.

The PRA’s latest quarterly data shows that 98% of applications were determined within the proposed new two-month statutory deadline, compared with 98.3% in the FCA’s most recent quarterly metrics, the release said.

Timeline and legislative dependency

Some of the proposed reforms require legislative change. By consulting now, the FCA and PRA said they will be ready to implement reforms quickly once legislation is passed.

The consultations are open until 22 January, seeking views on how the regime can be made more proportionate while maintaining high standards of individual accountability and conduct. The consultations invite feedback on all aspects of the proposals, with policy expected to follow in 2027.

The release said the consultations are the second and most significant phase of SM&CR reform. They build on changes in April 2026, including longer timelines for senior manager applications following unexpected or temporary changes, removal of duplicate certification requirements for overlapping functions, and a 30% increase in enhanced firm thresholds for larger firms.