By Éilis Corcoran, Senior Compliance Consultant
On 15 July 2025, the UK’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) jointly published a consultation paper (CP25/21) outlining proposed changes to the Senior Managers and Certification Regime (SM&CR). These reforms represent Phase 1 of a wider review, aimed at streamlining regulatory requirements while maintaining core standards of individual accountability and conduct.
The SM&CR has been in place for solo-regulated firms since 2019, and while its overarching aims remain supported by the industry, the FCA acknowledges that certain elements have become overly complex, duplicative or burdensome – particularly for smaller firms.
What is the FCA looking to change?
The FCA is aiming to make the SM&CR framework more proportionate and less resource-intensive, particularly for solo-regulated firms categorised as ‘Core’, who often face disproportionate administrative demands.
For Core firms, the key proposals include:
- Simplifying the approval process for Senior Manager appointments to reduce delays and administrative overheads
- Extending timeframes for updating the Statements of Responsibilities (SoRs) following internal changes
- Reducing duplication in certification roles, particularly where responsibilities overlap
- Providing clearer guidance on how the Conduct Rules apply to different categories of staff
- Allowing more flexibility in updating Directory Persons’ information and managing regulatory references
- Issuing updated guidance and templates to help firms interpret regulatory expectations more consistently. This may include a revised SoR and clearer role definitions
Collectively, these changes are intended to help firms reduce time spent on form-filling and process management, allowing more focus on effective oversight and culture.
These proposals are primarily focused on Core and Limited Scope firms, where the compliance burden is often felt most acutely. Firms subject to the Enhanced regime are unlikely to see material changes at this stage, although further reforms may be considered as part of Phase 2.
What does this mean for regulated firms?
While the foundations of SM&CR are not being dismantled, the proposals reflect a shift towards greater proportionality and clarity. For many firms, this should translate into reduced friction in areas such as role mapping, regulatory reporting, and onboarding of senior staff.
Firms subject to the Enhanced regime may particularly welcome the potential narrowing of its scope, given the additional compliance and governance obligations that apply under this categorisation.
These reforms are likely to provide welcome relief to compliance and HR teams alike, as they look to balance effective oversight with practical implementation.
When will the changes take effect?
The consultation remains open until 7 October 2025, with a policy statement expected in mid-2026. While the changes are not yet final, the direction of travel is clear: a more agile and less burdensome approach to SM&CR.
The government has also signaled that a second phase of reform may follow, potentially involving legislative amendments that could simplify the regime further. This may include removing the certification requirement entirely or reducing the number of roles subject to pre-approval.
What should firms be doing now?
Firms should review the proposed changes and begin assessing how their governance and compliance frameworks might be impacted. Particular focus should be given to Senior Manager mapping, SoR update processes, and certification tracking.
In addition, firms wishing to respond to the consultation should begin preparing their input ahead of the October deadline.
How we can help
At IQ-EQ, we work with a wide range of regulated firms to support implementation and optimisation of their SM&CR frameworks. Whether your firm is seeking help interpreting the proposed changes, reviewing existing SoRs and certification processes, or assessing proportionality under the enhanced regime, our regulatory experts can provide targeted support.
Our team can also assist with preparing consultation responses and engaging with regulators where required.
To discuss the SM&CR consultation in more detail or find out how IQ-EQ can support your firm, please contact our Compliance Consulting team.
