Sentinel Regulatory Services news & information

October 2026

The Financial Conduct Authority (FCA) has issued its latest Senior Managers and Certification Regime (SMCR) Consultation Paper (CP) proposing changes intended to streamline and reduce the burden of the regime by 50%. Responses must be submitted by 22 January 2027 with the expectation final rules will be published in H1 and implemented in H2 2027.

SMCR was first implemented for banks in 2016 before being extended to most firms by 2021.  The FCA CP states that there are 139,000 certified staff performing 261,000 functions although no statistics are provided on senior Management Functions (SMFs).  However, it gives an indication of the scale and blizzard of paperwork involved both for firms and the regulator. So, any simplification of the regime, a consequence of the FCA’s secondary objective to facilitate UK international competitiveness and growth, must be welcomed by all interested parties.

Table 1 (pages 4 and 5) of the CP (see link below) provides a useful summary of the proposed changes, which impact firms differently depending on whether they are categorised as Limited Scope, Core or Enhanced firms.  Selective highlighted proposed changes include:

The Senior Managers Regime

• Certain SMF functions will involve simplified notifications rather than requiring FCA approval
• Selected SMF functions to be removed and others redefined
• Enhanced firm thresholds to be increased, for example the enhanced asset managers threshold would rise from £65bn to £100bn AuM
• Temporary SMF cover extended from 12 to 18 weeks with the ‘Reasonably unforeseen’ test replaced by a ‘reasonable use’ test
• SMF Statements of responsibility (SoR) updates will no longer be submitted to the FCA
• No SoR will be required where one individual performs all of a firm’s SMF functions
• The reduction and simplification of prescribed responsibilities

Certification and the Directory

• The elimination of the Certification regime impacting 139,000 certified staff. Firms will remain responsible for ensuring individuals in relevant roles are competent, suitable, are appropriately qualified and meet appropriate standards of conduct.
• Removal of regulatory references for Certified persons
• Closure of the Certified persons Directory where the FCA argues its Firm Checker tool provides firm contact information. It will be interesting to see how firms respond to this proposal where many of their certified staff view the directory as their public accreditation.

Conduct rules

• Firms would no longer need to provide annual conduct rule training but, instead, notify staff of the conduct rules applying to them and the consequences of breaches
• Proportionate breach reporting such that only “breaches of regulatory significance” are reported
• For most non-SMF staff, raise the threshold for reporting breaches, so only disciplinary action that results in a final written warning or dismissal is reported
• Simplifying the breach reporting form and
• Extending from 12 to 14 months the reporting of breaches

SMCR and the Appointed Representative Regime

The FCA has previously proposed extending SMCR to include the Appointed Representative (AR) regime, which uses the predecessor Approved Person regime involving the registration of some 38,000 Approved staff.  CP26/37 does not expand on that proposal but one would expect ARs to transition to the simplified SMCR, whenever that implementation takes place.

Conclusion

The SMCR regime was rolled out in response to the 2008 financial crisis and, while appropriate for banks and the largest entities, always felt like regulatory overstretch for many smaller, non-systemically important firms.  These proposals will go a long way to remedying that position with a limited impact on regulatory risks.

CP26/37: Senior Managers and Certification Regime (SM&CR) Review: Phase 2