CP26/37: Senior Managers and Certification Regime (SM&CR) Review: Phase 2

Read CP26/37 (PDF)[1]

Why we are consulting

Changes proposed in the Financial Services and Markets (FSM) Bill[2] remove many prescriptive SM&CR requirements from legislation and make regulators responsible for deciding how these should apply in their rules.

Our proposals aim to maintain high standards of individual accountability and conduct while reducing unnecessary burden, making the regime more proportionate and easier to operate.

This consultation builds on the first phase of reforms set out in our Policy Statement (PS26/6)[3].

The main proposals include:

• Reducing the number of Senior Management Functions (SMF) applications by removing certain SMFs and making other roles notified.
• Streamlining the SMF application process.
• Reducing the number of firms subject to the Enhanced regime by raising thresholds.
• Removing on-going submissions of Statements of Responsibilities and Management Responsibilities Maps.
• Streamlining the Prescribed Responsibilities.
• Removing the Certification Regime.
• Retiring our Directory of certified and assessed persons.
• Simplifying Conduct Rule training and raising breach reporting thresholds.

Who this is for

All firms already in scope of the SM&CR, including third-country branches.

Firms due to come into scope of the SM&CR, such as cryptoasset firms.

Firms seeking authorisation for cryptoasset activities should also refer to PS26/13[4], which confirms our ‘modification by consent’ approach to the Certification Regime for cryptoasset firms entering our gateway, as well as our consultation on perimeter guidance for cryptoasset firms (CP26/36[5]).

Firms regulated by both the PRA and the FCA should also read the PRA’s Consultation Paper CP14/26[6].

Next steps

Online response form[7]

Send us your comments by 22 January 2027 using our online response form.

If you have accessibility or other needs that mean you cannot use the survey, please contact us[8] or use our accessibility service[9].

We will review the feedback and expect to publish final regulatory requirements in a Policy Statement in the first half of 2027.

Background

The SM&CR strengthens market integrity and helps reduce consumer harm by making senior managers accountable for their areas of responsibility and setting conduct standards for staff.

The regime has applied to the banking sector since 2016 and was later extended across financial services. We began reviewing it in December 2022. We published first-phase final rules for Phase 1 in Policy Statement PS26/6[3] in April 2026, alongside the PRA’s PS12/26[10].