The Financial Conduct Authority and the Prudential Regulation Authority confirmed changes this week to streamline the Senior Managers and Certification Regime (SM&CR), the post-crisis framework that pins individual accountability on named executives inside regulated financial firms. The reforms, announced on 22 April, are pitched by the regulators as a way to cut administrative duplication and support growth while preserving the regime's core accountability principles.
Michael Shand, managing principal at financial services and technology consultancy Capco, said the changes were evolutionary rather than a reset, but warned that the added flexibility could create fresh ambiguity about where responsibility sits inside larger firms.
The FCA and PRA's reforms announced yesterday to simplify the Senior Managers and Certification Regime (SM&CR) are a measured and pragmatic evolution rather than a reset. They preserve the integrity of the regime while acknowledging the practical realities firms face. With these reforms, senior manager accountability remains intact, but the regime will now operate with greater proportionality, reduced duplication and more operational flexibility.
Shand said firms should now map current SM&CR roles against the revised definitions and thresholds to work out where responsibilities may change, update internal processes to reflect extended timelines and simplified certification requirements, and re-check that governance frameworks still align with the streamlined expectations.
He flagged a specific risk in complex organisations: that greater flexibility may create uncertainty around where accountability actually sits, and that inconsistent interpretation of SM&CR responsibilities during the transition period could undermine the regime's intent. To mitigate that, he said firms should keep responsibilities clearly defined and backed by governance that can be evidenced, not just described.
