Why the SMCR Is Being Reformed

The SMCR was introduced for banks in 2016 and extended to insurers and then to solo-regulated firms by the end of 2019. By the mid-2020s, it covered tens of thousands of firms. Most observers agreed it had improved accountability: boards and regulators can now see who is responsible for what. But firms, trade bodies and the regulators themselves also pointed to costs that seemed out of proportion to the benefit, including:

• long waits for Senior Manager approvals, which held up appointments and left roles uncovered;
• a rigid limit on temporary cover when a Senior Manager left unexpectedly;
• thresholds for Enhanced status that had not kept pace with firm growth and inflation;
• heavy administration around regulatory references and the annual certification of staff; and
• notification requirements that generated paperwork without much regulatory value.

The government launched a review of the regime as part of a wider push to make UK financial services regulation more proportionate and competitive. The FCA and the PRA then consulted jointly in 2025 on changes they could make within their existing powers, while HM Treasury set out its intention to legislate for changes that need primary legislation, including to the Certification Regime itself.

The Main Areas of Reform

The table below summarises the main themes of the reform programme. The detail of each has been developed through consultation, so check the FCA’s SMCR pages and the PRA’s accountability pages for the latest policy statements and the rules now in force.

Because some of these changes depend on legislation and on the regulators’ final rules, firms should treat any summary, including this one, as a starting point and check the current position before relying on it.

Faster Approvals

Slow approvals were one of the most common complaints about the regime. A candidate accepts an offer, serves a notice period of three months or more, and then waits for the regulator’s decision before they can perform the role. The reform programme aims to shorten and make more predictable the time the regulators take to decide.

For firms, faster processing helps, but only if the application is complete. Missing information, an unclear Statement of Responsibilities or unexplained gaps in a candidate’s history still cause delay. Our guide to what goes wrong in Form A submissions covers the common problems, and our guide to managing the gap between offer and approval explains how to plan the timetable.

More Flexible Temporary Cover

Under the original rules, a firm could cover an unexpected Senior Manager vacancy for up to 12 weeks in a consecutive 12-month period without the cover holder being approved. For many firms, 12 weeks was not long enough to recruit, wait out a notice period and secure approval. The reform programme proposed making temporary cover more flexible, and our guide to the 12-week rule explains how the arrangement works now.

More time for temporary cover is useful, but it doesn’t remove the need for a plan. The person covering still needs to be capable of doing the job, and the firm still needs to start its permanent search quickly. For urgent situations, our urgent SMF replacement and interim compliance and MLRO services are designed for exactly this gap.

Enhanced Firm Thresholds

Solo-regulated firms fall into Limited Scope, Core or Enhanced categories. Enhanced firms face the most demanding requirements, including a Responsibilities Map, overall responsibility for every business area and additional Senior Manager Functions. The thresholds that decide Enhanced status were set when the regime was extended, and growth and inflation have pushed more firms over them since. The reform programme proposed raising the thresholds.

If your firm is close to the Enhanced line, check whether the new thresholds change your category. Our guides to which SMFs apply at which firm tier and becoming an Enhanced firm explain what each category requires. A firm that drops out of Enhanced status may be able to simplify its structure, but it should review its governance carefully before removing roles that are working well.

Regulatory References and Certification

Regulatory references and the Certification Regime create much of the SMCR’s day-to-day administration. Firms must request references covering the previous six years for Senior Managers and certified staff, and must assess and certify relevant staff as fit and proper every year. The reform programme proposed simplifying the reference process, and the government said it intended to legislate to change the Certification Regime, potentially removing it from legislation and replacing it with a lighter approach set by the regulators.

For now, firms should keep following the current rules until the changes take effect. Our guides to regulatory references and the six-year rule and the Certification Regime explain the current requirements. Whatever replaces certification, firms will still need to be satisfied that people in significant roles are fit and proper.

What Hasn’t Changed

The reform programme is about reducing friction, not reducing accountability. The core of the regime stays in place:

For anyone holding or applying for a Senior Manager role, the practical message is simple: the process around the role may get easier, but the responsibility of the role does not. Our guide to the SMCR explained sets out the regime as a whole.

What the Reforms Mean for Firms Hiring Senior Managers

• Plan for shorter, but not instant, approvals. Faster decisions help, but notice periods are still the longest part of most timetables. Start searches early.
• Use temporary cover deliberately. More flexible cover gives firms breathing space after an unexpected departure, but cover should be a bridge to a permanent appointment, not a substitute for one.
• Check your firm category. If new thresholds change your status, review which Senior Manager Functions and documents you need.
• Keep doing proper checks. Simpler reference rules won’t remove the need to understand a candidate’s regulatory history. Our guide to pre-offer checks sets out what to cover.
• Prepare complete applications. The faster the regulators aim to move, the more an incomplete application stands out.

What the Reforms Mean for Senior Managers and Candidates

For individuals, the most noticeable change is likely to be a quicker, more predictable approval process. That makes it easier to plan a move and reduces the risk of a long, uncertain gap between resigning and starting. But the personal exposure of a Senior Manager role is unchanged. Candidates should still do their own due diligence on a firm before accepting a role, and our guide to accepting an SMF role covers what to check. Those preparing for approval should still expect the regulator to probe their experience and understanding; see preparing for an approval interview.

Keeping Up to Date

The reform programme has been developed in stages, through consultation papers, policy statements and, where needed, legislation. The best sources are the regulators themselves: the FCA’s SMCR pages and the PRA’s strengthening accountability pages, which link to the latest consultations and policy statements. We update our Knowledge Centre guides as the rules change, and our SMCR glossary explains the key terms.

Frequently Asked Questions

Is the SMCR being abolished?

No. The reforms aim to simplify the regime and reduce its administrative burden, not remove it. Senior Managers still need approval and remain personally accountable.

Is the Certification Regime being removed?

The government has said it intends to legislate to change the Certification Regime, and the regulators have consulted on reducing its burden. Until changes take effect, firms must keep following the current rules. Check the FCA’s latest policy statement for the current position.

Will Senior Manager approvals be quicker?

That is one of the main aims. Faster target times help, but complete, well-prepared applications are still the best way to avoid delay.

Does the Duty of Responsibility still apply?

Yes. The reforms don’t change the personal accountability of Senior Managers.

Where can I find the final rules?

On the FCA’s and the PRA’s SMCR pages, which link to the latest consultation papers and policy statements.