Our response to the HM Treasury, Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) consultations on the Senior Manager and Certification Regime (SM&CR)

15 October 2025
3 mins
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We support the government’s aim to reduce the regulatory burdens of the SM&CR by 50%, without undermining its overall effect to support high standards in the financial services sector. However, stakeholders across the industry do not believe there is sufficient ambition in the proposals to achieve that level of cost reduction. For example, the FCA’s proposal to remove duplication of certifications will not remove 15% of total certification costs.

There is a need for further assessment of the proportionality of the regime, one of the key factors which drives the overall competitiveness of the regime. We believe it is possible to undertake this assessment ahead of any possible legislation and would welcome the opportunity to work collaboratively with HM Treasury, the FCA and PRA on this. There are examples of differentiated prudential regulation e.g. the PRA’s ‘strong and simple’ prudential framework for non-systemic banks and building societies. There should therefore be scope for a differentiated approach in the context of this area of conduct regulation. More broadly, we recommend that:

  • HM Treasury works in partnership with the FCA, PRA and industry to ensure an holistic approach to Phase 1 and Phase 2 of the proposals, ensuring there are no unintended consequences arising from changes made in Phase 1 that impact the potential for the more significant reform envisaged in Phase 2.
  • The FCA and PRA expedite their work on rules-based application of elements of the regime where legislation may be repealed or amended. We recognise that legislation can take time, but suggest this work should not be undertaken sequentially.
  • The overall competitiveness of the regime is based on the following:
    • The clarity of expectations and enforcement.
    • The proportionality of its application based on both the risks individuals, responsibilities and firms present and the need to contribute to the regulators’ secondary competitiveness and growth objectives.
    • The predictability of amendments to responsibilities.
    • The operational efficiency and effectiveness of regulators in processing applications.

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