The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed reforms to the Senior Managers and Certification Regime (SM&CR).
The SM&CR holds senior leaders in financial firms accountable for their conduct and competence, and the reforms aim to cut red tape and make it easier for firms to grow.
It marks the first phase of updates designed to make the regime more efficient and less burdensome for firms, while maintaining consumer protection and market integrity.
The proposed changes include allowing firms more time and flexibility to submit senior manager approvals in unexpected situations, reducing duplication where individuals hold multiple certified roles, cutting certification roles by 15 per cent, and simplifying the annual ‘fit and proper’ checks.
Other reforms would extend the validity of criminal record checks, allow more time to report updates to senior manager responsibilities and FCA directory listings, and provide clearer guidance on senior management functions’ role definitions.
The updates run alongside a separate government consultation on broader legislative reforms, including plans to scrap the Certification Regime and give regulators greater flexibility to reduce the number of senior management functions that require pre-approval.
FCA chief executive Nikhil Rathi says: “Integrity and accountability at the top matter, which is why there is widespread support for the Senior Managers and Certification Regime. We are proposing streamlining the rules, so they work better for industry and support competitiveness and our approach to outcomes-based regulation, while maintaining the high standards the regime has set.”
PRA and deputy governor for prudential regulation at the Bank of England chief executive Sam Woods says: “High standards of accountability are important for maintaining confidence in our financial services industry. Today’s changes will reduce the burden of the Senior Managers and Certification Regime without diluting accountability, and we will work with the government on further reforms.”
