Recalibrating SM&CR: FCA, PRA and HMT Consultation Papers

Summary

On 15 July 2025, the FCA, PRA and HM Treasury launched coordinated consultations proposing significant reforms to the Senior Managers and Certification Regime (SM&CR). These reforms represent the most comprehensive reassessment of the regime since its full implementation across solo- and dual-regulated firms in 2019. The consultations aim to streamline processes, reduce duplication, and ensure the regime continues to support accountability and good governance while also improving competitiveness in the UK financial services market.

Origins and Context

The consultations follow a joint FCA and PRA Discussion Paper (DP1/23) and HM Treasury’s Call for Evidence, both issued in March 2023. Feedback from firms, trade bodies, and stakeholders highlighted several recurring issues: delays in senior manager approvals, excessive administrative burdens in the Certification Regime, and inconsistencies between the FCA and PRA’s application of the rules. There was also criticism that the current framework creates friction for internationally active firms and hampers UK competitiveness.

Against this backdrop, the regulators and HM Treasury are seeking to recalibrate SM&CR. Their collective objective is to maintain individual accountability as the foundation of UK financial regulation, while making the regime more proportionate, clearer to navigate, and better aligned with global best practice.

FCA Consultation (CP25/21)

The FCA’s proposals focus on operational reforms that can be delivered through updates to its Handbook. These changes are designed to improve day-to-day administration of the regime without requiring legislative amendment.

Key FCA Proposals include the following.

A more flexible 12-week rule

Firms would be able to submit a Senior Manager Function (SMF) application within 12 weeks of a temporary appointment. The appointee could perform the role during that period, subject to the conduct rules. This would provide greater certainty for interim and cross-border appointments.

Streamlined Form A

The FCA intends to simplify SMF application forms, reducing the need for duplicative information and enabling firms to provide consolidated evidence of skills assessments, suitability checks, and development plans.

Extended validity of criminal records checks

The validity of checks would be extended from three to six months, reducing repeat checks for intra-group transfers.

Simplified Statements of Responsibilities (SoRs)

Solo-regulated firms would only need to submit the latest version of a SoR following a change, rather than multiple historical versions.

Clearer guidance on SMF roles

The FCA proposes clarifying the boundaries between certain SMF roles (e.g. SMF7 and SMF18) and aligning its guidance with the PRA.

PRA Consultation (CP18/25)

The PRA’s consultation largely mirrors the FCA’s but applies to dual-regulated firms such as banks and insurers. The PRA’s focus is on aligning procedural requirements with the FCA’s while maintaining prudential oversight standards.

Notable proposals include the following:

• Alignment of the 12-week rule.  Matching the FCA’s changes to facilitate temporary appointments.
• Improved SMF application process.  The PRA plans to provide clearer expectations on documentation and improve communication during approval processes.
• Updates to Supervisory Statements and Rulebook.  Existing PRA guidance (including SS28/15 and SS35/15) would be refreshed to remove ambiguity and duplication.
• Clarifications on fitness and propriety.  Additional guidance will help firms better evidence ongoing assessments of senior managers.

HM Treasury Consultation

HM Treasury’s consultation goes further by seeking views on legislative changes to the framework underpinning SM&CR. This would allow regulators greater flexibility in how the regime operates in future.

Proposals include the following:

• Removing the statutory Certification Regime. Certification could instead be implemented via FCA and PRA rules, potentially allowing more flexible timing and methods.
• Reducing SMF pre-approval requirements. Only certain senior roles would require pre-approval, with other roles notified post-appointment.
• Flexibility for SoRs and MRMs. Statutory prescription on Statements of Responsibilities and Management Responsibilities Maps would be removed.
• No expansion of scope. HM Treasury confirmed that Financial Market Infrastructure firms (e.g. CCPs and FMIs) will not be brought into SM&CR at this stage.

Practical Implications for firms

For firms, these proposals promise reduced administrative burdens, faster onboarding of senior managers, and clearer regulatory expectations. However, the core accountability framework remains unchanged. Firms will still need robust governance, oversight, and cultural frameworks to meet conduct standards.

Key implications include the following.

Next steps and timeline

The FCA and PRA consultations close on 7 October 2025, while HM Treasury’s consultation closes on 30 October 2025. Policy statements are expected in H1 2026, with phased implementation thereafter. HM Treasury’s legislative proposals would follow the Parliamentary timetable, likely from late 2026.

What should firms be doing now?

Firms should now:

• Begin drafting consultation responses, ideally in coordination with trade bodies.
• Review existing SM&CR processes and identify pain points.
• Plan for potential removal of statutory certification and associated impacts on HR and compliance.
• Monitor forthcoming regulatory guidance and policy statements closely.

Final thoughts

These consultations represent a clear shift towards a more proportionate, practical SM&CR framework. For firms, they offer both relief from administrative burdens and an opportunity to help shape a regime that remains globally credible while better supporting the UK’s competitive ambitions.