By This Hour Finance Desk
Britain’s two main financial regulators have put forward a broad simplification of the Senior Managers and Certification Regime, seeking to reduce approval, certification and reporting requirements while preserving direct scrutiny of the most consequential leadership roles.
The Prudential Regulation Authority and Financial Conduct Authority have launched parallel consultations on the plans, which would shift a substantial share of responsibility for checking appointees from the regulators to the firms that employ them. The proposals reach beyond a procedural adjustment: they would end the Certification Regime for about 139,000 people below senior-manager level, while retaining regulatory pre-approval for positions such as chief executives, chief financial officers and chairs.
For regulated firms, the balance being proposed is clear. The regulators want fewer routine interventions before appointments and less recurring administration for a large group of staff, but they say firms would still have to determine whether employees are competent, suitable and fit for their jobs. Individual accountability and standards of conduct would, on the regulators’ account, remain in place. Whether that division of duties produces the intended reduction in cost without weakening oversight will be central to the consultation.
Appointments would move from approval to notification
A principal change concerns roles that currently require advance approval from a regulator. Under the proposals, certain functions would no longer need that approval before an appointment takes effect. The positions identified include chief actuaries and the chairs of risk and audit committees. Firms would notify the relevant regulator instead.
That is a meaningful redesign of the process, not simply a shorter form. Pre-approval places the regulator between a firm’s selection decision and the start of the appointment. Notification would allow a firm to proceed while leaving it responsible for evaluating the person it chooses. The stated aim is to give firms greater speed and flexibility in recruiting and appointing people to those posts.
The proposal does not dispense with vetting as a concept. It transfers the immediate duty to assess fitness and propriety to the firm. The regulators also say that employees whose positions move to notification would remain subject to the same level of accountability as before. In practical terms, the consultation presents simplification as a change in how supervision is administered rather than a retreat from expectations about conduct.
Important safeguards would remain for the highest-ranking functions. Chief executives, chief financial officers and chairs are among the senior-manager roles that would continue to need regulator pre-approval and fit-and-proper assessments before appointment. The regulators would also retain the ability to demand pre-approval for a role that would normally be notified where they judge a case to carry high risk.
That retained discretion matters because it preserves a route for intensified scrutiny outside the core group of always-approved functions. Yet the source material does not set out the criteria that would determine a high-risk case, how often the power might be used, or how a firm would know in advance that a notified appointment could be brought back into an approval process. Those questions are likely to be relevant to consultation responses.
Certification regime faces its largest proposed reduction
The most extensive proposed cut would be the removal of the Certification Regime and associated administrative requirements for roughly 139,000 individuals below senior-manager level. Those people are currently subject to annual certification checks and are included on the Financial Services Register. The proposals would remove both requirements for that population.
The number illustrates the scale of the planned change, but it should not be read as a count of people who would no longer face any standards. The regulators say firms would continue to be responsible for ensuring that their employees remain competent and suitable and meet appropriate conduct standards. The distinction is between an ongoing internal responsibility for the firm and a prescribed certification-and-register framework for individuals below the senior-manager tier.
For firms, annual certification can involve repeated assessment and recordkeeping across large workforces. Removing that specified cycle could reduce administrative work. It could also require firms to decide how they will demonstrate internally that they are meeting their continuing obligations, especially where a role no longer carries the former formal designation. The released material describes the proposed removal but does not provide a detailed replacement process for those internal assessments.
The consultation also proposes a higher threshold for reporting breaches of conduct rules involving most staff below senior-manager level. Training associated with those rules would be streamlined. The stated rationale is that firms should be able to focus their attention more closely on more serious misconduct.
Here, too, the policy choice involves a line-drawing exercise. Raising a reporting threshold could reduce lower-level reporting and administrative handling; it may also alter what reaches the regulators. The available release does not specify the proposed threshold, explain how it will distinguish serious from less serious cases, or set out the training changes in detail. The consultations, rather than the announcement, are the relevant primary documentation for those design questions.
Projected savings are estimates, not realised results
The Bank of England release puts the expected saving to firms at about GBP 2 billion over 10 years. It also says the package is expected to reduce PRA pre-approvals under the SM&CR by 43% and to halve the overall burden of the PRA regime. These are regulatory estimates attached to proposals, not reported savings already achieved by the industry and not evidence of an observed market outcome.
The published figures also separate out an effect for FCA enhanced solo-regulated firms. For that group, the regulators estimate that around 15% of applications would shift from approval to notification, two senior-manager-function roles would be removed, and a further 19% saving would result. The release does not, in the material available here, give a full methodological account that would allow an outside reader to assess the assumptions behind those projections.
That distinction is particularly important for financial firms assessing the announcement. The estimate describes anticipated compliance-cost effects across a decade, rather than a cash saving for any individual institution in a defined period. Actual results would depend on the final rules, the treatment of legislative changes, firms’ own controls and the operational choices they make after implementation.
No current market figures, share-price reaction or investor response were supplied with the announcement material. Nor does the material support an inference about how particular listed companies might be affected. The immediate financial significance of the plan therefore lies in the regulators’ estimate of industry-wide compliance relief, subject to consultation and later policy decisions.
A second phase after earlier changes
The regulators describe the consultations as the second and most significant phase of reform to the regime. The SM&CR was introduced 10 years ago with the objective of strengthening accountability among senior decision-makers at regulated firms. The current proposals maintain that accountability as a stated objective while seeking to make the machinery around it more proportionate.
They follow changes made in April 2026, according to the release. Those earlier measures included longer timelines for senior-manager applications following unexpected or temporary changes, removal of duplicate certification requirements where functions overlap, and a 30% increase in the threshold for enhanced firms. The new consultation package takes a further step by proposing to remove some approval requirements and eliminate the Certification Regime itself for the identified staff population.
The timing also leaves a substantial route to implementation. The consultations are open until 22 January, and the regulators expect policy to follow in 2027. Some elements would require legislative change. Consultation responses could affect the final design, while legislation is a separate condition for reforms that cannot be delivered solely through the regulators’ own rules.
That sequence means firms should distinguish the announced direction from an operative new regime. The proposals are neither final rules nor an immediate change in legal duties. Existing requirements cannot be assumed to have fallen away merely because the regulators have signalled a preferred future structure.
The unresolved test is how accountability will be evidenced
The consultation’s central proposition is that accountability can be sustained with fewer regulatory approvals, fewer prescribed certifications and more targeted reporting. The retained approval requirement for top roles, and the ability to seek approval in high-risk cases, are the principal safeguards described in the release. The continuing firm duty to assess staff is the other part of that structure.
What is not yet clear is how the final framework would evidence those responsibilities after the Certification Regime is removed, or how consistently firms would apply their own fit-and-proper assessments under a notification model. The available material also does not establish how respondents will weigh the projected administrative benefits against any concern that reduced formal processes could make weaknesses harder to identify.
These questions do not negate the stated objectives of the reform. They define the practical issues on which the consultation can gather evidence before policy is settled. The proposals promise a smaller administrative footprint; their final credibility will depend on the detailed safeguards, scope and implementation arrangements that emerge from that process.
The report has not been independently corroborated. It is based on the regulators’ published announcement and its stated estimates, rather than independently verified evidence of the proposals’ eventual costs, effects or implementation.
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Reporting notes
What is confirmed: The consultations run until 22 January, with policy expected in 2027; some changes need legislation.
Why this matters: The proposal could shift significant assessment and recordkeeping duties to firms while retaining regulator scrutiny for core leadership roles.
What remains unclear: Final rules, legislative timing, high-risk criteria and the assumptions behind projected savings are not set out in the supplied material. This report is based on one source and has not been independently corroborated.
