Implementation of reforms to the Senior Managers and Certification Regime ("SMCR") is underway. The FCA's recently released policy statement rationalises rather than radically overhauls requirements on firms and individuals. Further changes will follow as regulators press ahead with streamlining individual accountability regimes.

What is changing, and when?

Some changes took immediate effect from 24 April 2026. Others will come into force on 10 July 2026 (or 1 September 2026).

The PRA has published a corresponding policy statement setting out new rules and guidance. For details of the implications of that and the FCA's policy statement for insurers, see our separate Clifford Chance briefing.

The FCA has not deviated significantly from the proposals in its consultation paper published in July last year (on which we commented in our RIFC Insights blog post). Of the changes that have taken effect immediately, the following will have the most impact in practice:

 o Ability to rely more heavily on the 12-week rule (including for interim appointments) - this will give 12 weeks to submit approval applications in relevant cases, rather than 12 weeks to submit and receive approval;

o Extension of validity of criminal record checks and timeframes for most directory entries, and reduction of response period to regulatory references – criminal record checks for applicants for Senior Manager Functions will now remain valid for six (rather than three) months. Firms now have 20 (rather than seven) working days to update Directory entries. Guidance now states that firms should aim to provide regulatory references within four (rather than six) weeks;

o Additional guidance on FCA expectations of how prescribed responsibilities should be split and allocated – The FCA has acknowledged that there will be circumstances in which it will be appropriate for firms to reflect how business and commercial responsibilities are split between members of senior managers. The new guidance notes that responsibilities should not be split between more than two individuals, and the consultation paper notes that changes made following this relaxation may be short lived due to further expected changes to the SMCR;

o Further clarification on Conduct Rules and notifications (in references and to the FCA) – These include:

• Senior Managers' individual reporting responsibilities – failing to take reasonable steps to ensure that the firm or individuals for which the Senior Manager is responsible comply with their obligations promptly to notify matters to the FCA are now expressly included in the list of ways in which the Senior Manager may infringe the Conduct Rules. Separately, guidance now makes clear that Senior Managers are expected proactively to disclose to the FCA certain information about themselves. Specific matters now listed include prosecutions or convictions for certain offences, other matters bearing upon honesty, integrity and reputation of which the FCA is not already aware, information about previous dealings with regulators and about the individual's past regulatory record. ;
• the nexus between ongoing/unfinished investigations and regulatory references – the FCA has not removed the requirement to disclose information relevant to fitness and propriety, including information gathered during investigations which may not have been progressed to a conclusion before an employee leaves. However, it has now indicated in regulatory guidance that firms should not include information about suspected misconduct unless they have taken sufficient steps to verify that information. The Guidance also now explicitly states that  firms wishing to refer to misconduct or include adverse information about the subjects of references, should have reasonable grounds for believing that the misconduct has taken place or that information is true and firms should not base references on unproven allegations or mere suspicions.;
• managing privileged material and exchanges in tandem with ongoing reporting obligations – in particular, guidance now states in terms that although legally privileged communications are not required to be disclosed, duties to report to the FCA apply even in the matter is "in parallel, the subject of , or referred to in described in, legally privileged communications, documents or other records created within or for the firm".;
• the interplay between general notifications under SUP15 with reporting of disciplinary matters – the FCA has reiterated that only Conduct Rule breaches where firms have taken certain types of disciplinary action (namely the issuing of a formal written warning, suspension, dismissal or reduction or recovery of remuneration) need to be notified to it. It has now also set out some examples of situations in which taking disciplinary action may not automatically trigger regulatory reporting obligations. Its non-exhaustive list of examples includes cases where individuals are suspended in order for firms to investigate possible misconduct, where firms seek to reduce or recover remuneration based on failures by individuals to meet commercial objectives, where it comes to light that business results on which a bonus was based are in fact less favourable than was thought at the time of the award of the bonus and where adjustments to a team's compensation are made without any personal culpability on the part of particular individuals.

On 10 July, rules will change to:

• allow individuals occupying the SMF18 function at solo-regulated firms to hold any prescribed responsibility;
• increase by 30 per cent the relevant thresholds at which firms are to be treated as "Enhanced Firms" for the purposes of the SMCR; and
• remove various overlapping Certification Functions (which the FCA estimates will cover approximately 15 per cent of roles).

Which further changes are on the horizon?

HM Treasury has also released its consultation response setting out its plans to simplify the SMCR. It has confirmed its intention, when parliamentary time allows, to remove certification requirements from legislation, and reduce the number of senior management functions that require regulator pre-approval. The King's Speech earlier this week confirmed its intention to make these changes to legislation through the Enhancing Financial Services Bill this parliamentary session.