FCA Proposes Sweeping SM&CR Overhaul, Ending Certification for 139,000 Staff

The UK’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a sweeping rollback of the Senior Managers and Certification Regime (SM&CR), a deregulation move projected to save financial firms £2 billion over the next decade.

London's trading industry is coming home!

The most significant operational change proposed for UK-regulated firms under the SM&CR review is the complete removal of the Certification Regime.

If adopted, around 139,000 certified staff below senior-management level would no longer face annual regulatory certification or appear on the FCA’s public Directory, materially reducing a long-standing administrative burden.

However, the proposal, which will be consulted on until January 2027, would not remove firms’ broader responsibility to assess staff competence, suitability and conduct. Senior managers in key roles would continue to require regulatory approval, and the reforms are expected to take effect only after final policy and legislative change

Fast-Tracking Boardroom Appointments

The regulators are also proposing to reduce friction around boardroom restructuring. Under the consultations, pre-approval would be removed for a range of regulatory functions, including Chief Actuaries and the Chairs of Risk and Audit Committees.

Firms would instead notify regulators of these appointments, retaining responsibility for assessing candidates’ fitness and propriety.

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Importantly, the regulator would retain the power to require prior approval for a notifiable role where it considers the appointment sufficiently high-risk.

CEOs, CFOs and Chairs would continue to require regulator pre-approval. The FCA is also consulting on raising the conduct-rule breach-reporting threshold for most staff below senior-manager level, alongside streamlined training requirements, to direct compliance resources toward more serious misconduct.

Pragmatic Regulatory Shifts

The FCA recently demonstrated a more flexible approach in digital assets by finalisting its proposed cryptoasset regime while easing stablecoin requirements following industry feedback.

It halved the planned capital requirement for stablecoin issuance from 2% to 1% and removed certain proposed public-disclosure obligations, while retaining the core regulatory framework.

The UK is pursuing burden reduction across several sectors, but Europe’s approach remains more mixed.

ESMA has recommended a long-term “report once” model for transaction reporting, designed to reduce duplication and streamline reporting infrastructure. However, implementation would require legislative changes and a phased rollout.

Meanwhile, the EU’s MiCA regime continues to impose substantial authorisation and prudential requirements on crypto firms, creating a sharper contrast with the UK’s more recently recalibrated stablecoin framework.