SM&CR reforms

May 2026

More than three years on from starting to gather formal feedback, the FCA and PRA have finalised reforms to the Senior Managers and Certification Regime (SM&CR) via PS26/6 and PS12/26 respectively. 

This article explores the changes introduced, key impacts for firms, and further changes coming down the track.

The FCA’s amendments largely simplify and streamline the regime, although there is a small tightening of the requirements in a couple of areas. Most of these changes took effect on 24 April:

1. Further guidance on the SMF7 and SMF18 roles (see more in “key impacts” below).
2. Streamlining annual checks to certify individuals as ‘fit and proper’.
3. Further guidance on prescribed responsibilities (PRs), including where it is appropriate for them to be split.
4. Longer validity for criminal record checks for SMF candidates, prior to application submission. Checks no longer required for internal/intragroup moves.
5. More flexibility around the 12-week rule, allowing firms 12 weeks to submit applications, rather than 12 weeks to submit and receive approval.
6. More time for firms to update the certified staff Directory and to submit updated Statements of Responsibilities (SoRs) and Management Responsibilities Maps (MRMs).
7. Clarifications on the conduct rule notification requirements.

In addition, a small number of changes will take effect on 10 July 2026:

1. Shortened period to respond to regulatory reference requests (from 6 weeks to 4 weeks).
2. A 30% increase in some of the thresholds for ‘enhanced’ SM&CR firms (e.g. increasing the threshold for assets under management from £50bn to £65bn) and a new 5-year mechanism to facilitate further increases.
3. Removing the need to certify people to hold multiple overlapping functions, reducing the total number of certification roles required by approximately 15%.

Similarly to the FCA, the PRA is also allowing more flexibility around the 12-week rule, more time to submit updated SoRs and MRMs, updating the criminal record check requirements and providing further clarifications on SMF7 roles (see more in “key impacts” below). 

The PRA will also make the below updates alongside more minor changes that all came into effect on 24 April 2026:

• Additional text in supervisory statements SS28/15 and SS35/15 to make clear that PRA assessments of an individual’s fitness and propriety (F&P) may take account of any previous approvals in other jurisdictions or similar accountability regimes and experience as an SMF in other firms.
• Update the supervisory statements to clarify that the PRA has no set expectations for the form or procedures used by a firm in the annual assessment of employees in the Certification Regime.
• Consider further changes to the small threshold for PRs in Phase 2 work.

Broadly speaking, the Phase 1 changes are largely administrative to allow firms more time and flexibility to meet the SM&CR requirements, with the more impactful changes to follow in Phase 2 (see below). 

That said, relevant firms should take a close look at the most impactful Phase 1 changes which relate to new guidance for the allocation of the SMF7 role (the group entity senior manager), and have the potential to broaden the scope of individuals captured:

• PRA changes: 
  • The PRA is amending supervisory statements to clarify the scope of SMF7 roles, as unlike other, more role-specific functions, SMF7 applies across a range of business models and governance arrangements. 
  • In particular, the PRA has clarified that the policy intent is to capture those individuals with responsibility for implementing the strategy, or who otherwise may be able to affect the safety and soundness of a firm’s UK-regulated activities, rather than broader group-wide strategy setting.
  • The updated guidance also brings controllers and, where appropriate, their representatives within scope of SMF7 designation where they have significant influence over the day-to-day management of a PRA-authorised firm. This could bring individuals at private equity sponsors and sovereign wealth investors into the scope of the regime. 
  • And finally the guidance clarifies that PRA can also identify SMF7s. The PRA does not expect that there will be a significant net increase in SMF7s across the industry as a result of this updated guidance.
     
• FCA changes: The FCA has removed some existing SMF7 guidance and replaced it with more practical examples relating to a group’s chief financial officer (CFO). The new guidance is clear that implementing strategy for a UK firm or carrying out day-to-day management is likely to capture individuals as SMF7s, but there is also some useful wider context and detail that should help firms with their decision-making. This includes areas where the function may be relevant such as finance, technology and HR.

The FCA has also provided minor additional guidance in relation to the SMF18 role (other overall responsibility), to clarify that the person performing this role should be the most senior person in the relevant area. 

More substantial changes are coming via legislative changes from the government, which will be progressed when parliamentary time allows. Planned changes will:

1. Remove the Certification Regime from primary legislation and enable the FCA and PRA to develop a more proportionate, flexible framework.
2. Reduce the number of SMFs that require regulatory pre-approval.
3. Repeal legislation relating to Statements of Responsibilities, enabling the FCA and PRA to consider more appropriate requirements.
4. Streamline the Conduct Rules.
5. Give regulators the power to specify the circumstances in which they may accept SMF applications subject to time-limits or conditions.
6. Amend the Financial Markets Infrastructure SM&CR regime to ensure it is consistent with the wider SM&CR changes that are planned. 

Once legislation is introduced, the FCA and PRA plan to consult on rule changes to operationalise the above changes, considering how best to use the additional flexibility they have been provided.

Firms will want to review the review the end-to-end changes in detail and update relevant policies and controls to put them into practice.

In particular, firms should review the revised SMF7 and SMF18 guidance in detail against their governance arrangements to check allocations remain aligned with the PRA and FCA’s revised expectations.