What the reforms to the Senior Managers & Certification Regime mean for employers

In a joint press release issued on 22 April 2026, the FCA & PRA have announced phased reforms to the Senior Managers & Certification Regime (SM&CR), aimed at streamlining accountability, increasing flexibility and reducing regulatory burden. These updates, outlined in FCA Policy Statement PS26/6, PRA Policy Statement PS12/26 and the FCA’s press release, maintain core accountability while reducing administrative burdens.  

These reforms will be welcomed by all HR teams having to grapple with SM&CR requirements, and will impact on senior appointments, workforce governance, HR processes and disciplinary risk within regulated firms.

The PRA had previously suggested in its consultation paper CP18/25 that the Phase 1 changes would likely be implemented in mid-2026. The FCA had similarly advised in its consultation paper CP25/21 that publication of a policy statement would be expected in mid-2026. However, they are clearly ahead of schedule as the PRA and the FCA have confirmed that several amendments to the rules will take effect on 24 April 2026 (two days from the date of publication of the relevant policy statements).

Key Phase 1 SM&CR changes taking effect on 24 April 2026

• 12-Week rule flexibility: Firms have 12 weeks to submit applications for replacement Senior Managers (SMFs) rather than requiring approval within that period, and candidates are allowed to act while waiting for a determination. This means firms will have more time to submit senior manager applications where there has been an unexpected or temporary change, easing the pressure associated with interim appointments, short‑notice cover arrangements and temporary appointments without immediate regulatory approval risk. However, employers must ensure that individuals stepping into interim senior roles understand that personal conduct accountability still applies, even on a temporary basis. This has clear implications for induction, training and disciplinary processes.
• Recertifying individuals as fit and proper: Guidance clarifying expectations of firms where recertifying individuals as Fit & Proper. Emails can suffice rather than issuing a paper-based certificate, plus firms can incorporate certification into annual appraisal cycles.
• Criminal record checks:
  • The validity period for new SMF criminal record checks will increase from three months to six months.
  • A fresh criminal record check will be no longer required where an existing SMF holder moves internally to another SMF role within the same group, where there is a gap of no more than one month.  

This supports internal mobility and succession planning, reducing friction when promoting or transferring senior individuals across group entities. HR teams should ensure recruitment and onboarding processes reflect the updated criminal records checks position once system changes are fully implemented.

• Regulatory references: Handbook guidance reduces the period for firms to respond to requests for regulatory references from six to four weeks.
• Conduct rules: Clarifying guidance on notification requirements, regulatory references without disciplinary action, and application of the Senior Manager Conduct Rules. Note that some of the new COCON guidance on notification requirements and Senior Manager Conduct Rule 4 will come into effect on 1 September 2026 (see PS25/23).
• Statements of Responsibilities (SoRs): Firms can submit updated SoRs on a bulk basis up to six months after the last submission.

SM&CR Phase 1 changes that take effect on 10 July 2026

• Prescribed Responsibilities: There will be a rule change to allow SMF18s at solo-regulated firms to hold any Prescribed Responsibility.
• Enhanced Firm thresholds: From 10 July 2026, thresholds for Enhanced SM&CR classification will increase to reflect inflation. There will be a 30% increase in certain Enhanced Firm thresholds and a new five-year mechanism in place for threshold increases. The asset threshold rises to £65 billion (from £50 billion), and revenue thresholds rise to £45 million (from £35 million) or £130 million for consumer credit firms (from £100 million).
• Certification regime: Removal of overlapping multiple certifications (approx. 15% of roles).

Future reforms

Alongside the policy statements, HM Treasury has confirmed its intention to pursue legislative reform in a second phase (Phase 2), including proposals to remove the Certification Regime from statute for less senior roles and to give regulators greater flexibility over which functions require pre‑approval. These changes would go further but are not yet in force.

• Phase 2 (Proposed): Includes removing the Certification Regime from legislation, allowing the FCA/PRA to manage it directly.
• Further changes: Future steps may include reducing the overall number of senior manager roles. 

What should firms do now?

Firms should consider:

• reviewing current SM&CR populations and current processes for re-certifying individuals as Fit & Proper
• updating policies and processes around criminal records checks for SMF holders, to reflect the latest updates
• assessing whether it will remain within the enhanced firm regime once the threshold is increased from 10 July 2026
• ensuring HR, legal and compliance teams remain aligned, particularly where senior performance, conduct or exits are in issue.

How Birketts can help

Birketts advises financial services employers on the employment, governance and regulatory people‑risk implications of SM&CR changes, including senior appointments, disciplinaries, exits and regulatory references.

If you would like support reviewing how these reforms affect your workforce or senior management framework, please get in touch with our financial services employment team, in particular Olivia Toulson and Lara Small.