| Link(s): | Consultation: Reforming the Senior Managers & Certification Regime – GOV.UK Reforming_the_Senior_Managers__Certification_Regime_Consultation_2025.pdf |
Context
The Government is consulting on reforms to the SM&CR, with the aim of streamlining the regime. In her previous Mansion House speech, on 14th November 2024, the Chancellor set out the Government’s view that the SM&CR has played a key role in improving standards and accountability across the financial services sector, but also acknowledged the administrative cost and frictions that the regime places on firms.
Key points to note and next actions
The Consultation proposes:
- To make changes to the Certification Regime framework in order to enable more fundamental and far-reaching changes to the SM&CR (i.e., to remove it from legislation). Several features of the regime that drive cost with limited benefits, such as the requirement for annual recertification and the broad scope of functions to which the regime applies, derive from the requirements set out in primary legislation. The government intends to remove these requirements when Parliamentary time allows.
- Major changes to the legislation that sets the framework for the Senior Managers Regime, with a similar objective to increase flexibility and proportionality. Core to the concerns around unnecessary burdens is the friction and the administrative cost imposed by the large number of senior manager roles for which pre-approval by the regulators is required before an appointment. There is scope for reform to significantly reduce the number of pre-approvals that need to be sought from the regulators, without undermining the policy objectives of the SM&CR, and the government proposes two key changes to the legislative framework to support this. The first is to make changes to the legislation to provide regulators with greater flexibility in how they define Senior Management Functions. The second is to make it possible for regulators to focus pre-approval on some senior manager roles, while for others, firms could conduct checks themselves and notify regulators of new appointments.
- A number of proposals to ease the burden of the SM&CR, including changes in relation to Statements of Responsibilities and changes to the Conduct Rules.