TL;DR
The UK’s Prudential Regulation Authority and Financial Conduct Authority have opened parallel consultations on proposals to streamline the Senior Managers and Certification Regime. Plans include ending certification requirements for around 139,000 staff and shifting some senior appointments from prior approval to notification; regulators estimate the changes could save firms about £2 billion over 10 years. The consultations close on 22 January, and policy is expected in 2027.
The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have opened parallel consultations on plans to streamline the UK’s Senior Managers and Certification Regime, including ending annual certification checks for about 139,000 staff below senior-manager level. The regulators estimate the proposals could save firms around £2 billion over 10 years, while retaining pre-approval for key senior roles and maintaining individual accountability standards.
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Under the proposals, firms would no longer need to obtain regulatory pre-approval for a range of functions, including chief actuaries and chairs of risk and audit committees. Instead, firms would notify regulators directly when making those appointments and remain responsible for checking that candidates are fit and proper. The PRA and FCA say this change would give firms more flexibility and speed in hiring.
The plans would also remove the Certification Regime and its associated administrative requirements for around 139,000 people below senior-manager level, including annual certification checks and inclusion on the Financial Services Register. For most staff at that level, regulators also propose raising the threshold for reporting conduct-rule breaches and streamlining conduct-rule training.
Some roles would remain subject to prior regulatory approval, including chief executives, chief financial officers and chairs. Regulators say they could also require pre-approval for a role that would otherwise be subject to notification in a high-risk case. Firms would continue to be responsible for staff competence, suitability and conduct, and the regulators say accountability would remain at the same level for people whose roles no longer need pre-approval.
Fewer Checks, Continued Firm Accountability
The proposed changes could reduce the regulatory administration involved in hiring and overseeing staff, particularly below senior-manager level. The regulators say firms would be able to redirect resources toward customer and market outcomes, recruitment, innovation and investment. Their estimate of £2 billion in savings over 10 years indicates the expected financial scale, but it is a forecast, not a realised saving.
The changes would also alter how regulators and firms divide responsibility for appointments. For some functions, regulators would receive notification rather than assess and approve a candidate in advance. That would make firms’ own checks and governance more central to the process, while regulators retain the option to require pre-approval in higher-risk cases. The proposal therefore reduces some formal checks but does not remove firms’ responsibility for conduct or fitness and propriety.
For employees, the largest stated change is the proposed end of routine certification for roughly 139,000 staff. The regulators say they intend to preserve conduct standards and accountability; the practical effect will depend on the final rules and how firms adapt their internal oversight.
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A Second Phase of Regime Reform
The SM&CR was introduced 10 years ago to strengthen accountability among senior decision-makers in regulated firms. The current announcement is described by the regulators as the second and most significant phase of reform. The PRA and FCA say the regime’s accountability purpose remains, while the consultations examine ways to make its requirements more proportionate.
Earlier changes took effect in April 2026. These included longer timelines for 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 new proposals would go further by removing certification requirements for a large group of staff and changing pre-approval arrangements for specified roles.
The regulators’ release also reports that the proposals would reduce PRA SM&CR pre-approvals by 43% and halve the overall burden of the PRA regime. For FCA enhanced solo-regulated firms, where fewer senior-manager functions apply, it says around 15% of applications would move to notification and two SMF roles would be removed, producing a further 19% saving. These figures describe projected effects of the proposals, not outcomes already achieved.
“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
Consultation Leaves Final Rules Open
The measures are proposals, not final rules. The consultation process may lead to changes, and the regulators are seeking feedback on all aspects of the reforms. The precise implementation timetable and final scope will depend on consultation responses and, for some proposals, legislative change.
The regulators say firms would remain responsible for ensuring staff are competent, suitable and meet conduct standards, but the release does not set out every operational detail of how firms should carry out those duties after certification is removed. It also does not quantify how individual firms’ costs or compliance processes would change. The estimated savings are aggregate projections over a 10-year period.
Responses Due Before January Deadline
The PRA and FCA consultations are open until 22 January. They invite responses on how the regime can be made more proportionate while maintaining high standards of conduct and individual accountability. Some reforms require legislation, and the regulators say they are consulting now so they can move quickly once the necessary legislation has passed.
The regulators expect to publish policy in 2027. Until then, the existing requirements remain in force unless and until changes are formally implemented. Firms and affected staff will need to follow the final rules and any implementation guidance issued by the regulators.
Key Questions
What are the regulators proposing?
The PRA and FCA propose streamlining the SM&CR, including ending certification requirements for around 139,000 staff below senior-manager level and replacing prior approval with notification for some appointments.
Will all senior roles stop needing regulatory approval?
No. The proposals retain pre-approval for roles including chief executives, chief financial officers and chairs. Regulators could also require pre-approval for other roles in high-risk cases.
Does removing certification mean firms no longer check staff?
No. Under the proposals, firms would still be responsible for ensuring employees are competent, suitable and meet conduct standards. The planned change removes specified certification administration, not firms’ responsibility for their staff.
When could the changes take effect?
The consultations close on 22 January, and policy is expected in 2027. Some reforms require legislation, so the proposals are not yet in force and the final implementation timing remains unsettled.
Source: primary
