HMT, FCA & PRA Reviews of the Senior Managers & Certification Regime (SMCR)

Posted on: 29 July 2025

Written by: Ria Lo

On 15 July 2025, Rachel Reeves, set out the government’s next steps to boost the UK’s financial services industry in her Leeds Reforms. Simultaneously, HMT, the FCA and the Bank of England (BoE) published their consultation papers proposing reforms to the Senior Managers & Certification Regime (SM&CR). The proposed measures signal a meaningful change to the current framework while still maintaining the core accountability principal and conduct standards with which we are now familiar.

The strategic objective of the tri-partite consultation is economic transformation to reposition the UK as a financial goliath by 2035. The reforms will streamline the current SMCR framework, whilst still preserving the benefits the regime offers; cumulatively boosting the UK’s competitiveness and supporting growth to transform the UK to the premier global financial services destination.

HMT’s consultation will focus on legislative changes to the FSMA, whilst the FCA and BoE concentrate on market integrity and operational improvements within the SM&CR framework.

In CP25/21, the FCA sets out the two-phase approach to the regime overhaul:

Phase 1: practical, operational improvements within the existing legislation. Reforms are to be made in parallel with the BoE’s PRA to reduce the burden on firms and make requirements both clearer and more efficient.
Phase 2: fundamental changes to the FSMA, as such this phase is contingent on the outcomes of HMT’s legislative consultation. HMT’s proposals include the removal of the certification regime from legislation to be replaced by more proportionate arrangements such as regulator rules.

Phase 1 of the consultation will close on 7 October 2025, and we can expect final policy statements in mid-2026. High-level details of the proposed changes for phases 1 and 2 are captured in the below table.

Desired Outcomes

The FCA are seeking the following outcomes as a result the proposed changes:

Increased proportionality;
Improved efficiency; and
Greater clarity of the SMCR Requirements.

Summary of FCA Proposal of Changes

FCA Phase 1 includes

FCA Phase 2 (dependent on legislative changes) includes

12-week rule – additional flexibility for interim Senior Managers; firms will have 12 weeks to file a complete application as opposed to the previous 12 weeks to obtain full approval.
SMF Roles
- Streamline approval process
- Allow 12 weeks to report changes to SoRs
- regulatory references
Certification Roles – Remove any overlap and provide guidance on the annual certification to streamline the process.
Criminal Record Checks – To increase validity period of criminal record checks.
The FCA to provide further guidance on
- Applicability of key SMF Roles;
- Allocation of Prescribed Responsibilities; and
- Application of Conduct Rules and related reporting requirements
Directory of Persons – To allow firms more time for firms to updated specific information on the Directory of Persons.
Regulatory References – Guidance on change about the period in which firms provide regulatory references about individuals upon request from a hiring firm.
Enhanced SMCR firm types – Thresholds to be raised for becoming an Enhanced SMCR firm type.
FCA Handbook – Technical changes to the FCA Handbook to bring in alignment with the PRAs proposal.

12-week rule – extension to 24 or 36 weeks
SMF Roles – Reduce the number of SMF roles to reduce the number of SMF approvals.
SMF approval process – Provide flexibility to appoint interim SMFs prior to seeking FCA approval by;
SMF assessment – Streamline the SMF assessment process by reviewing requested documents and relevant systems;
Statement of Responsibilities – Reduce the frequency of submissions of SoRs, the FCA to review the list of PRs, and simplify the Management Responsibilities Maps;
Certification – streamline the regime to replace certification in a way that minimises the burden and complexity on firms while ensuring fitness and property of individuals;
Directory – The FCA to consider removing the directory and explore with the industry alternative options to ensure consumers have other sources of information;
Conduct Rules Breach – Streamline the reporting of breaches.

How Cosegic can help

With regulatory change on the horizon, now is the time to assess how the proposed SMCR reforms could impact your firm. Our experts at Cosegic can help you navigate the upcoming changes, review your current governance framework, and ensure you're prepared for both phases of the reform.

Get in touch to discuss how we can support your firm through the SMCR transition.

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