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July 15, 2025
In December 2022, the previous Government announced that the Treasury, FCA and the PRA would review the SM&CR. The FCA published a Discussion Paper (DP23/3) jointly with the PRA in March 2023, and invited views on the regime’s effectiveness, scope and proportionality, and on potential improvements. The Treasury launched a Call for Evidence on the regime at the same time, and a Treasury Consultation has been launched alongside this Consultation.
The FCA has announced that, in a first phase of relatively low-level reforms, the FCA and the PRA propose to streamline the SM&CR to allow some additional flexibility for firms and make the requirements clearer and more efficient. Further changes the FCA are looking to explore in Phase 2 of the reform are set out at paragraph 1.11 of the Consultation.
In this first phase of reforms the FCA is proposing to:
- Amend the 12-week rule, (which allows someone to cover for a Senior Manager without being approved) so that firms that use it would have 12 weeks to submit an application for an SMF, rather than 12 weeks to get a decision on an application. Once an application has been submitted, the person performing the role under the 12-week rule could continue to perform it until the application is determined by the FCA. In addition, firms would also not need to submit updated Statements of Responsibilities (SoRs) to the FCA until the absence has reached 12 weeks.
- Streamline the SMF approval process, including planning potential changes to processes and communications (particularly in relation to foreign candidates considering performing SMF roles).
- Increase the validity period of criminal record checks for new SMF applications from three months to six months, and remove the requirement for firms to undertake criminal records checks where an existing SMF holder is applying for an SMF in the same firm or group.
- Allow more time to report updates to Statements of Responsibilities (SoRs), requiring firms to keep SoRs up to date at all times at the firm, but not needing to submit them to the FCA each time they make a change. Instead, the FCA would allow submission of changed SoRs on a periodic basis and no later than every 6 months after the last submission.
- Remove overlap in certification roles (for example, removing the requirement for separate certification when the manager of a certification employee is already certified for another certification function at the same firm) and provide guidance on annual certification to help firms streamline the process. (For example, the certificate can be provided digitally rather than in hard copy, can embed re-certification within existing processes such as performance reviews, and that firms can conduct the certification process proportionately when there are no changes from the previous year – such as not re-checking criminal records).
- Allow more time for firms to update specified Directory information.
- Provide guidance in areas such as the applicability of key SMF roles, the allocation of Prescribed Responsibilities (PRs), and the application of Conduct Rules and related reporting requirements.
- Change guidance about the period in which firms should provide regulatory references about individuals upon request from a hiring firm (reducing the period in which to reply from 6 weeks to 4 weeks).
- Raise the thresholds for becoming an Enhanced SM&CR firm (in particular, increasing the total intermediary regulated business revenue threshold from £35m to £45m).
Firms are invited to respond using the FCA’s online form by 7th October 2025. In phase 2 the FCA will work with the Treasury as it consults on legislative changes to make additional changes to the regime, including what should replace the certification regime, and the number of senior managers subject to approval.
ICS regularly receives queries related to the SM&CR, so please contact us on .
