The Financial Conduct Authority and Prudential Regulation Authority have unveiled the opening phase of reforms to the Senior Managers and Certification Regime (SMCR), aiming to strip out operational friction without diluting accountability.
According to RiskSmart, the measures come into force from April 2026 and form the first stage of a wider reform agenda expected to run over the next 12 to 24 months. For regulated firms, the shift is less a change in supervisory philosophy and more a recalibration of how the regime works day to day.
RiskSmart recently delved deeper into how the FCA and PRA have begun its SMCR simplification programme.
Both regulators have conceded that parts of SMCR have grown operationally complex and, in places, duplicative. This initial package deliberately targets improvements that can be delivered without legislative change, with more fundamental structural reform anticipated to follow.
Among the most immediate impacts is a cut to certification scope. By removing duplicate certification requirements for individuals performing overlapping functions, the certified population is expected to shrink by roughly 15%. Certification itself survives, but the regulators are signalling a clear pivot towards a more proportionate, risk-focused model, which should meaningfully lighten annual certification exercises and record-keeping.
Fewer firms will also be caught by the Enhanced tier of the regime. Thresholds for Enhanced firms are set to rise by 30%, pushing a number of businesses down into the Core category. Given that Enhanced firms face more detailed governance, documentation and oversight obligations, reclassification should deliver a noticeable reduction in ongoing SMCR workload, concentrating the heaviest requirements on the largest and most complex institutions.
Senior manager processes are being loosened too. Firms will gain more time to submit approval applications in urgent or temporary scenarios, additional time to notify changes to Statements of Responsibilities, longer validity periods for criminal record checks and extended windows to update the FCA Directory. These adjustments should ease succession planning and interim arrangements.
Annual fit and proper assessments will be simplified as well, with the regulators confirming plans to streamline evidential requirements and cut duplication, a change likely to be welcomed by firms with large certified populations.
Crucially, this is only the start. The government has signalled it is weighing legislative changes that could reshape the Certification Regime and reduce the number of Senior Management Functions requiring approval, with further consultation expected later in 2026.
In the near term, firms should assess whether their Enhanced or Core classification may shift, gauge the impact of reduced certification scope, identify opportunities to streamline annual certification and update internal SMCR procedures and governance documentation. The immediate changes are incremental, but the direction of travel points firmly towards a more proportionate regime.
Read the full RiskSmart post here.
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