FCA and PRA begin SMCR simplification programme

The Financial Conduct Authority and Prudential Regulation Authority have announced the first phase of changes to the Senior Managers and Certification Regime (SMCR), with a clear objective: reduce operational burden while maintaining accountability.

These changes take effect from April 2026 and represent the first stage of a broader reform programme expected to continue over the next 12–24 months.

For firms, this is less about a change in regulatory philosophy and more about a recalibration of how the regime operates in practice.

Direction of travel: simplification, flexibility and proportionality

The regulators have acknowledged that, over time, elements of SMCR have become operationally complex and in some areas duplicative, which I’m sure many of you would agree with. The latest announcement focuses on removing friction from day-to-day compliance processes while keeping the core framework intact.

This first phase is deliberately targeted at changes that can be implemented without legislative reform. More fundamental structural changes are expected to follow.

Reduction in certification scope

One of the most immediate impacts for firms will be a reduction in certification roles. The removal of duplicate certification requirements for individuals performing overlapping functions is expected to reduce the certified population by around 15%.

For many firms, this will materially reduce the scale of annual certification exercises and ongoing record-keeping requirements. While certification itself remains in place, the regulators are clearly signalling a move towards a more proportionate and risk-focused approach. Music to everyone’s ears!

Fewer firms captured by Enhanced SMCR

Thresholds for Enhanced firms will increase by 30%, meaning a number of firms are likely to move from the Enhanced regime into the Core category.

This is a significant change. Enhanced firms are subject to more detailed governance, documentation and oversight requirements, so moving out of this category should result in a noticeable reduction in ongoing SMCR workload.

The change reinforces the regulators’ focus on ensuring the most intensive requirements apply primarily to the largest and most complex firms.

Greater flexibility for senior manager processes

Several practical changes have been introduced to ease pressure around senior manager appointments and role changes.

Firms will benefit from:

• More time to submit senior manager approval applications in urgent or temporary scenarios
• Additional time to notify changes to Statements of Responsibilities
• Longer validity periods for criminal record checks used in applications
• More time to update the FCA Directory

These adjustments address common operational challenges and should make succession planning and interim arrangements easier to manage.

Streamlining annual certification

Annual fit and proper assessments will also be simplified.

Although full detail will follow in guidance, the regulators have confirmed their intention to streamline evidential requirements and reduce duplication within annual certification processes.

This is likely to be particularly welcomed by firms with large certified populations, where the annual cycle can be resource-intensive.

Early steps in a wider reform programme

Importantly, this announcement should be viewed as the beginning of a broader reform journey.

The government has already signalled that it is considering legislative changes that could reshape the future of the Certification Regime and reduce the number of Senior Management Functions requiring regulatory approval.

Further consultation is expected later in 2026.

What firms should be doing now

In the short term, firms should begin assessing:

• Whether their Enhanced/Core classification may change
• The impact of reduced certification scope
• Opportunities to streamline annual certification processes
• Updates required to internal SMCR procedures and governance documentation

While the immediate changes are incremental, they clearly indicate a longer-term shift towards a more proportionate SMCR framework.

Firms should view this as the start of a phased programme rather than a single regulatory update.