CP25/21: Senior Managers and Certification Regime review

Read CP25/21 (PDF)[1]

Why we are consulting 

The SM&CR has driven up standards in financial services. But we want to boost competitiveness, and support growth, by streamlining the regime while preserving its benefits.  

In phase 1 of reforms, and in parallel with the Prudential Regulation Authority (PRA), we want to reduce the burden on firms and make the requirements clearer and more efficient.  

Proposals include:  

• Give firms more time and flexibility to submit applications for approving new senior managers when there has been an unexpected or temporary change.
• Strip out duplication where the same individuals are certified for separate functions, which would reduce the number of certification roles by 15%.
• Provide guidance on how to streamline the annual checks firms need to undertake to certify individuals are ‘fit and proper’ to do their role.
• Allow more time for firms to report updates to senior manager responsibilities.
• Increase how long criminal record checks for senior manager applications are valid for, prior to application submission.
• Help firms to better understand the definition of certain senior management function roles.
• Give firms more time to update our directory[2], which lists certified staff.

In phase 2, we will work closely with the Treasury as it consults on legislative changes to make additional changes to the regime.

Who this is for

This consultation applies to all solo-regulated and dual-regulated firms, including third country branches.  

It will also be of interest to:

• industry groups and trade bodies
• consumer groups and individual consumers
• policy makers and other regulatory bodies
• industry experts and commentators
• academics and thinktanks

Next steps

This consultation has now closed. 

We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.

In phase 2, we will work closely with the Treasury as it consults on legislative changes to make additional changes to the regime, including:

• What should replace the certification regime.
• The number of senior managers subject to approval.

Background  

The SM&CR seeks to reduce harm to consumers and strengthen the functioning of the market by making sure financial services professionals:

• Are individually accountable to their employers and to the regulators.
• Meet expected standards of conduct.

It is set out in the Financial Services and Markets Act 2000 (FSMA) and implemented through the FCA Handbook and through PRA rules for dual-regulated firms.  

In December 2022, the previous government announced that the Treasury, FCA and the PRA would review the SM&CR.  

The PRA also published a consultation for dual-regulated firms: ‘Review of the Senior Managers and Certification Regime (SM&CR)[3]’. 

We published a Discussion Paper (DP23/3[4]) jointly with the PRA in March 2023. We invited views on the regime’s effectiveness, scope and proportionality, and on potential improvements. The Treasury launched a Call for Evidence on the regime at the same time.