The UK’s Senior Managers and Certification Regime (SM&CR) may be on the verge of its biggest overhaul since launch.
According to Star Compliance, on October 22, 2026, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) released their Phase 2 consultations, CP26/37 and CP14/26, setting out plans to cut administrative load, simplify compliance and hand firms more discretion over how they manage individual accountability.
The headline change is the proposed removal of the Certification Regime, including annual Certification and the FCA Directory. Firms would still need to ensure staff are competent and suitable, and qualification and training rules would continue where relevant. Regulatory references would stay mandatory for Senior Manager candidates.
Senior Manager requirements would also be pared back. Some roles would shift from approval to notification, the number of Prescribed Responsibilities would fall, and Statements of Responsibilities and Management Responsibilities Maps would be simplified, with firms largely keeping records internally. Mandatory Conduct Rules training would give way to employee notification duties, and breach-reporting thresholds would narrow. The FCA proposes a 14-month reporting window for most non-SMF staff subject only to the Individual Conduct Rules, while PRA reporting would remain at seven business days.
Elsewhere, the FCA would extend its temporary cover period from 12 to 18 weeks and lift selected Enhanced regime thresholds by roughly 50%. Scope would widen too, with Conduct Rules extended to sole traders and SM&CR applied to new entrants such as certain cryptoasset firms. The PRA plans to extend integrity and honesty requirements to relevant employees at CRR and Solvency II firms.
Although the two regulators are broadly aligned, differences around temporary cover, Senior Manager functions, breach reporting and Prescribed Responsibilities could force dual-regulated firms to run separate processes. Legal advisers have described the package as a rebalancing of oversight and a move towards a less prescriptive framework.
The FCA estimates annual industry savings of around £229m, about 53% of its modelled baseline, while the PRA projects roughly £11.5m. However, these figures come from regulatory cost models and assume firms realise the full benefit of every streamlined activity. The FCA also set aside a further £153.2m in yearly costs linked to SM&CR systems, policies and assurance, as it could not reliably estimate how these would change.
Crucially, nothing changes yet. Responses are due by January 22, 2027, with implementation possibly starting in the second half of 2027. Firms should keep meeting current obligations while reviewing Senior Manager roles, competence controls, documentation and operational workflows. Ireland is also worth watching, as the Central Bank of Ireland reviews its IAF and SEAR regimes in the first half of 2027, though there is no sign it will drop certification.
For RegTech providers and compliance teams alike, the message is clear: fewer prescribed processes will not mean less responsibility. Clear accountability, effective controls and auditable evidence will remain essential.
Read the full StarCompliance post here.
Copyright © 2026 RegTech Analyst
Copyright © 2026 RegTech Analyst
