The Senior Managers & Certification Regime (SM&CR) was introduced to strengthen individual accountability across the financial services sector. It replaced the Approved Persons Regime, applying to banks in 2016 and to solo-regulated firms in 2019.
In CP25/21, the FCA and PRA are reviewing the operation of SM&CR, focusing on whether it delivers improved governance and conduct outcomes, whether the compliance burden is proportionate to firm size and risk, and whether simplification is possible without undermining the regime’s core principle of accountability.
This review aligns with the Edinburgh Reforms and the UK Government’s wider Future Regulatory Framework (FRF) Review, which seeks to tailor financial regulation in a post-Brexit environment.
What Changes Are Being Proposed?
- Proportionality for Smaller Firms
SM&CR currently applies to all solo-regulated firms, but the obligations it imposes can be disproportionate for small and low-risk firms. The FCA is considering introducing a more proportionate approach, potentially creating a “lighter touch” version of SM&CR for firms that pose minimal risk. This would involve fewer documentation and oversight requirements. If implemented, smaller firms may no longer be required to produce extensive Statements of Responsibilities or undertake full certification processes, while larger firms would continue to be subject to more rigorous governance requirements.
- Improving the Senior Managers Regime
The FCA has identified that Statements of Responsibilities (SoRs) are often overly lengthy and duplicative, and that Responsibilities Maps can be unclear or inconsistently applied. To address these issues, the regulator is proposing to streamline and standardise the templates for SoRs and to provide clearer guidance on how responsibilities should be assigned and documented. There is also the possibility of revising Prescribed Responsibilities to avoid overlap or ambiguity. These changes would give firms a more consistent and simplified method for assigning responsibilities, reducing the burden on Compliance and HR teams while giving Senior Managers clearer expectations and accountability.
- Strengthening and Clarifying Certification
One of the current challenges with the Certification Regime is the differing interpretations of the “fit and proper” requirement across firms, coupled with inconsistent assessment practices throughout the industry. The FCA is considering the introduction of clearer guidance on assessing fitness and propriety, as well as the potential standardisation of assessment criteria, particularly regarding competence and conduct. A greater emphasis on ongoing assessment, rather than relying solely on annual sign-offs, is also under review. These changes could require firms to revise their certification processes, performance reviews, and conduct evaluations, and are likely to result in higher standards for certified staff, especially those in risk, compliance, and client-facing roles.
- Revisiting the Conduct Rules
Although the Conduct Rules apply to almost all staff, they are often poorly understood or insufficiently embedded within firms. Enforcement can also be difficult due to ambiguity around breaches. The FCA is considering clarifying how and when the Conduct Rules apply, possibly narrowing or rewording their scope for certain staff roles. Enhancements to training and the introduction of more consistent reporting standards for breaches are also being explored. If adopted, these changes will require firms to revisit their training programmes and develop clearer documentation and internal reporting processes for Conduct Rule breaches.
- Optimising Regulatory Approval and Notification Processes
The FCA has acknowledged that delays in approving Senior Manager Functions and confusion surrounding notification forms and processes are ongoing challenges. To address this, the regulator is considering streamlining the approval process, including the potential digitisation or automation of some parts of the system. Revised notification forms are also proposed to make submissions more user-friendly and faster to complete. For firms, these changes would mean faster onboarding of Senior Managers and a significant reduction in administrative time spent navigating the approvals process.
What Should Firms Do Now?
- Review internal SM&CR frameworks to identify pain points.
- Map existing SoRs, certification criteria, and Conduct Rule training against possible changes.
- Engage with the FCA consultation by submitting views and evidence. The deadline to respond to CP25/21 is 7 October 2025.
Conclusion
The FCA’s CP25/21 consultation is not a retreat from accountability; it reflects the need for regulation to evolve. A more agile, proportionate SM&CR will allow firms to focus on meaningful governance rather than box-ticking, while maintaining a strong culture of individual responsibility.
How Complyport Can Help
- SM&CR Framework Review: Complyport can conduct a comprehensive review of your existing SM&CR documentation and governance structure to identify inefficiencies, gaps and areas for simplification.
- Senior Manager Responsibility Mapping: We assist firms in producing clear, compliant SoRs and Responsibilities Maps aligned with FCA expectations, both current and post-reform.
- Certification Regime Support: We design and implement structured, evidence-based certification processes that meet FCA “fit and proper” requirements and facilitate ongoing monitoring.
- FCA Authorisation and SMF Applications: We manage end-to-end SMF applications to reduce errors, avoid delays and ensure your firm operates without regulatory interruption.
Contact Complyport today to discuss how we can support your SM&CR compliance strategy and book a meeting with one of our Subject Matter Experts.
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