Key Takeaways from the FCA’s Phase 1 Changes to the SM&CR

On April 22, 2026 the FCA confirmed Phase 1 of its changes to the Senior Managers and Certification Regime (SM&CR) in PS26/6, most of which takes effect on April 24, 2026. This is the first phase of reforms aimed at improving the efficiency and effectiveness of the regime and follows the FCA’s consultation in CP25/21 published in July 2025. The FCA’s work is undertaken in parallel with the Prudential Regulation Authority’s (PRA) Consultation and Policy Statement and HM Treasury, Consultation and Consultation Response, both also published on April 22. This forms part of a broader review of SM&CR by HM Treasury, the FCA and the PRA, announced by the Government in December 2022.

The FCA expects to consult on a second more meaningful set of reforms in Phase 2 later this year, however, the Treasury has said that proposals for legislative changes will happen when Parliamentary time allows, so we will be closely monitoring the situation.

Background

As part of this review, the FCA published a joint Discussion Paper DP23/3 with the PRA in March 2023, seeking views on the regime’s effectiveness, scope and proportionality. HM Treasury also launched a ‘Call for Evidence’ in 2023. Responses to DP23/3 indicated broad agreement that the SM&CR is effective, while also highlighting areas where the regime could be improved. 

Phase 1 of the reforms focuses on measures to reduce unnecessary regulatory burdens within the existing framework, while Phase 2 will consider more fundamental reforms, subject to legislative change.

Timelines for Key Changes

Most of the Phase 1 changes are effective from April 24, with improvements to regulatory reporting and processes applying from July 10. Changes are also made to align with the FCA’s new rules on non-financial misconduct, effective from September 1, 2026.

Changes Effective on April 24, 2026:

• Criminal Record Checks: The validity period of criminal records checks for a Senior Manager Function (SMF) candidate seeking FCA approval is extended from three to six months and checks are no longer required for internal or intragroup moves. The relevant forms will not be updated until July 10 and, during this time, the forms will not match the revised requirements.
• 12-Week Rule: Firms now have 12 weeks to submit an SMF application, rather than 12 weeks to submit and receive approval. The FCA reminds firms that individuals who are not SMF managers performing an SMF role are still subject to the Conduct Rules and any breaches must be reported.
• Statements of Responsibilities (SORs) and Management Responsibilities Maps (MRMs): Firms now have up to six months to notify the FCA of any changes to SoRs and MRMs. Firms will only need to provide the latest version if more than one change was made during the previous six months.
• Certification Regime: New guidance clarifies the expectations for firms when recertifying individuals as fit and proper. This includes the provision that digital certifications, including emails, are sufficient and that firms can incorporate the certification process into annual appraisal cycles.
• Directory Information: Firms now have up to 20 working days to update directory information for certified and other directory persons. However, firms still have to update the directory within seven working days about staff departures. 
• Regulatory References: The new guidance says that firms should aim to respond to regulatory reference requests within four weeks, rather than six weeks.
• Conduct Rules: Updated guidance clarifies:
  
  1. The notification requirements for breaches under SUP 15.11
  2. Regulatory references expectations where an individual has breached a Conduct Rule but disciplinary action was not taken
  3. The application of Senior Manager Conduct Rule 2 (SC2) 
• SMF7 (Group Entity Senior Managers) and SMF18 (Other Overall Responsibility Functions): The FCA has updated its guidance for dual-regulated and enhanced firms on who falls within the scope of the SMF 7 and SMF 18 positions.

Changes in Effect on July 10, 2026:

• Certification Regime: The FCA will remove overlapping multiple certifications for certain roles to avoid duplication, which the FCA estimates will reduce the number of certification roles by approximately 15%. They are as follows:
  
  1. A Significant Management Function holder who is also certified as an FCA Material Risk Taker at the same firm
  2. A manager of a certification employee when the individual is already certified for another certification function at the same firm
  3. An FCA Material Risk Taker at a dual-regulated firm who is also certified by the PRA as Material Risk Taker, Significant Risk Taker or Key Function Holder at the same firm.
• Prescribed Responsibilities (PR): A new rule will allow SMF 18 holders at solo-regulated enhanced SM&CR firms to hold any PR. 
• Thresholds for Becoming an Enhanced SM&CR Firm: The threshold will increase by 30% and this will be reviewed every five years. 

Next Steps

Firms can benefit from most of the changes straight away. Those effective from July 10 will give firms and the FCA time to update relevant processes and procedures. Firms may wish to review their existing SM&CR frameworks to take advantage of new rules and guidance, and monitor developments relating to potential Phase 2 reforms. However, changes to procedures do not have to be made by April 24 and may be implemented in due course.

How Kroll Can Help

We can advise and support firms on their processes and procedures for ongoing compliance with the SM&CR. This includes:

• Reviewing and updating SM&CR policies, procedures and governance documentation in line with the new rules and guidance
• Training senior managers and staff on conduct rules standards, including on tackling non-financial misconduct and complying with the upcoming changes
• Reviewing and updating fitness and propriety procedures in line with the updated guidance

If you require any assistance with any of the items mentioned above or would like to learn more about how Kroll can support you, please reach out to your usual contact at Kroll or any of the contacts listed below.