Simplifying SM&CR to boost growth
- Adempi
- Jul 17
- 3 min read
The FCA has announced proposed reforms to the Senior Managers and Certification Regime (SM&CR), aiming to reduce the burden on firms while preserving the regime’s core benefits.
The consultation paper builds on previous reviews by the Treasury, FCA and PRA on the effectiveness of the current regime. Feedback highlighted support for SM&CR and its focus on holding senior individuals accountable for their conduct whilst acknowledging areas where the regime could be refined to be less onerous for firms.
The plans for change
One challenge we explored in our recent Proving Competence Webinar is how firms can assess and maintain staff competence in a proportionate and effective way.
The FCA’s plan to provide practical guidance on streamlining the annual ‘fit and proper’ certification process will be a welcome development for many of our clients and other firms across the industry.
Other key proposals include:
Giving firms more time to submit Senior Manager applications when there has been an unexpected or temporary change
Increasing the validity period of criminal record checks for senior manager applications
Reducing duplication in certified roles where the same individuals are certified for separate functions
Allowing more time for firms to update the FCA register of certified staff
Providing guidance on key areas, such as:
the applicability of key SMF roles;
allocation of Prescribed Responsibilities (PRs); and
application of Conduct Rules and related reporting requirements
Clarifying expectations around regulatory references, including the timeframe for providing them to hiring firms
Raising the thresholds for firms to become an Enhanced SM&CR firm, which would reduce the number of firms subject to the most stringent requirements
Climate for change
We’re often asked at the moment whether talk of deregulation will materialise in practice and yes, we do consider that a stripping back of SM&CR will occur. These proposals align with the government’s wider push for a more flexible and proportionate regulatory environment.
In her recent Mansion House speech, Rachel Reeves, Chancellor of the Exchequer, was explicit in her plans for SM&CR:
“I am introducing new targets for the FCA and PRA to cut times on authorisations and approvals… to ensure that regulators are really regulating for growth. And I am streamlining the Senior Managers and Certification Regime, reducing the burdens it imposes on firms by 50%, and slashing approval timelines, so you can bring in talent to your business more quickly.”
From extending timelines, removing duplication to clarifying expectations around regulatory references and certification, we can see the FCA’s intent to ease the administrative burden and reduce operational pressure on firms. These proposals will be welcome news for Compliance, HR teams and firms across the industry.
Next steps
We encourage all firms subject to the SM&CR regime to carefully review the proposed reforms. The consultation remains open for comments until 7 October 2025, and Adempi will be submitting a formal response to share our thoughts with the regulator.
If you're a client and have feedback or insights that you’d like us to reflect in our submission, please don’t hesitate to get in touch.
Adempi's compliance consulltants provide specialist advice and practical support to FCA-regulated firms.
Our SM&CR experts are on hand to help you with any related queries, processes and FCA applications.
If you’d like to speak to one of the team about SM&CR, Training and Competence or anything else, you can reach us at contact@adempi.co.uk or on 0203 925 4761.
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