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The Financial Conduct Authority (FCA) has published PS26/6, setting out Phase 1 reforms to the Senior Managers & Certification Regime (SM&CR). These changes are designed to reduce administrative burden and improve proportionality without weakening individual accountability. The reforms were developed jointly with the Prudential Regulation Authority (PRA) and apply to all SM&CR firms. Phase 2 reforms, which will be more significant, are expected later in 2026, subject to legislative change by HM Treasury.
The changes apply to all SM&CR firms (solo-regulated and dual-regulated).
Detailed changes and firm impact
The table below summarises each regulatory change, its practical implications and the effective date.
|
Area |
What Is Changing |
Firm Impact |
Effective |
|
Criminal records checks (CRC) |
Validity period extended from three to six months. No CRC required for internal or intragroup SMF moves. |
Reduces cost and duplication for longer recruitment cycles and group restructures. |
April 24, 2026 |
|
12-week rule |
Firms now have 12 weeks to submit an SMF application (not receive approval). The candidate may act in role until FCA determination. Senior Manager Conduct Rules apply during this period. |
Greater flexibility for emergency SMF replacements. Conduct rules obligations arise immediately for the temporary holder. Review internal breach reporting obligations for “acting-up” personnel. |
April 24, 2026 |
|
SMF7 – group entity senior manager |
New Handbook guidance clarifies when an individual is captured by SMF7, aiming to reduce unnecessary approvals. |
Reassess current SMF7 holders. Group-level individuals who do not implement decisions at the firm level will generally not be in scope. |
April 24, 2026 |
|
SMF18 – other overall responsibility SMF22 – other local responsibility (branch) |
Updated guidance removes requirement for SMF18 and SMF 22 holders to have 'equal status' to executive directors. |
Useful for firms with complex group governance where the SMF18/22 holder reports into the governing body but does not hold equivalent executive status. |
April 24, 2026 |
|
Prescribed responsibilities (PR) |
New guidance on PR allocation to SMFs and on splitting PRs. New PR allocation table (SYSC 24 Annex 2) introduced. |
Review existing PR allocations against the new guidance table. Splitting PRs is now explicitly permitted where justified. Use the annex to sense-check current arrangements. |
April 24, 2026 |
|
SMF18 – PR restriction lifted |
SMF18 holders at solo-regulated firms may now hold any PR (previously restricted). |
Solo-regulated firms with SMF18 holders can now allocate a broader range of PRs to them. Review existing allocations for potential changes. |
July 10, 2026 |
|
Statements of responsibilities (SoR) and management responsibilities maps (MRMs) |
Both solo and dual-regulated firms now have up to six months to notify changes. Only the latest version needs to be submitted where multiple changes occur in a period. |
Significant administrative relief. Update internal processes to track changes internally and submit batched updates. Note: firms must still keep internal copies current at all times. |
April 24, 2026 |
|
Certification regime – process |
Guidance confirms certificates can be issued digitally (email suffices). Recertification can be embedded in annual appraisals. Proportionate approach where no change from prior year. |
Review and update certification processes. Many firms can streamline by using appraisal cycles. Removes cost of paper certificates. |
April 24, 2026 |
|
Certification regime – overlaps |
Removal of overlapping dual certifications for the same individual (~15% reduction in roles). FCA will update the Directory itself; firm forms are unchanged. |
No action required from firms on the Directory for removed roles. Reduces ongoing certification and Directory maintenance burden. |
July 10, 2026 |
|
Enhanced firm thresholds |
Key financial thresholds:
New five-year inflation-linked update mechanism introduced. |
Some firms previously in the Enhanced tier may move to Core. Firms should assess current position against new thresholds. Ongoing mechanism means thresholds will adjust automatically every five years. |
July 10, 2026 |
|
Directory reporting window |
Most Directory update windows extended from seven to 20 business days. Seven-day window retained for leavers only. |
Reduces operational pressure for high-volume updates. Two deadlines to manage: 20 days (general) and seven days (departures). Update internal HR/compliance processes. |
April 24, 2026 |
|
Regulatory references |
Target response time reduced from six to four weeks (guidance, not rule). New guidance on disclosing suspected misconduct where employee leaves before investigation concludes. |
Update reference request processes to target four-week turnaround. Review policy on incomplete investigations — disclosure of suspected misconduct may now be appropriate and expected. |
April 24, 2026 |
|
Conduct rule notifications |
Guidance clarifying: only breaches with specified disciplinary action need reporting; SC21/SC42 guidance clarified; legal privilege does not prevent SC4 obligations; suspension for investigation purposes does not trigger reporting. Note: Some of the new COCON guidance on notification requirements and Senior Manager Conduct Rule 4 will come into effect on 1/9/26 (see PS25/23). |
Review notification policies and train HR and Compliance teams. Ensure distinction between investigatory suspension (not reportable) and disciplinary action (reportable). SC4 now has expanded disclosure examples. |
April 24, 2026
Sept 1, 2026 (COCON) |
1Senior Manager Conduct Rule 2: You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.
2Senior Manager Conduct Rule 4: You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice.
Recommended firm action checklist
Immediate — by April 24, 2026
- Communicate to HR/Compliance that CRC validity is now six months; no new CRC is needed for internal/group SMF moves.
- Update the 12-week rule procedures: the clock runs to application submission, not FCA determination. Ensure that candidates during the rule period have Senior Manager Conduct Rules applied to them.
- Brief compliance on new breach reporting for 12-week rule appointees.
- Review SMF7 holders against new guidance; consider whether any can be de-registered.
- Review SMF18/22 holders: remove any “equal status” requirement from internal governance policies.
- Introduce a six-month batched SoR/MRM submission calendar; ensure internal records remain live.
- Update certification processes to permit digital certificates and appraisal-embedded recertification.
- Review policy on disclosing suspected misconduct, adjust regulatory reference turn-around target to four weeks.
- Train HR/Compliance on conduct rule notification changes (especially investigatory suspension vs. disciplinary action).
By July 10, 2026
- Assess whether the firm crosses any “Enhanced” tier thresholds under the new figures; notify FCA if tier changes.
- Review any PR restrictions on SMF18 at solo-regulated firms and update SoRs if new allocations are appropriate.
- Prepare for the FCA to remove ~15% of overlapping certification roles from the Directory; verify data accuracy beforehand.
By September 1, 2026
- Review COCON guidance updates on SC4 (disclosure of personal matters), aligned to PS25/23 non-financial misconduct changes.
- Brief senior managers on expanded SC4 disclosure expectations.
Where to find the full list of SMF roles and functions:
- Primary Reference: SUP 10C.4.3R
- Direct URL: https://www.handbook.fca.org.uk/handbook/SUP/10C/4.html
Key SMF functions referenced in PS26/6
|
SMF |
Name |
|
SMF 1 |
Chief executive |
|
SMF 7 |
Group entity senior manager |
|
SMF 9 |
Chair |
|
SMF 10 |
Chief risk officer/compliance oversight |
|
SMF 11 |
Head of internal audit |
|
SMF 12 |
Chief finance officer |
|
SMF 16/17 |
Compliance oversight/MLRO |
|
SMF 18 |
Other overall responsibility |
|
SMF 19 |
Head of overseas branch |
|
SMF 22 |
Other local responsibility (branch) |
|
SMF 25/26 |
Partner/managing partner |
Additional Handbook references:
Full list of SMFs: SUP 10C.4.3R | Prescribed responsibilities: SYSC 24.2.6R | PR allocation guidance: SYSC 24 Annex 2 (new) | Certification functions: SYSC 27.8 | Conduct rules: COCON 2.1 and 2.2 | Directory reporting: SUP 16.26
SM&CR regime: enforcement trends
Based on existing FCA data:
- FCA’s November 2024 freedom of inquiry (FOI) release and FCA 2024–2025 enforcement data:
Enforcement outcomes
The table below shows the senior manager cases closed from 2022 to November 2024 (excluding two where the SM&CR breach was removed during investigation).
|
Outcome |
Number |
% of closed cases |
|
Financial penalty or public censure |
2 |
6.7% |
|
Prohibition |
0 |
0% |
|
Undertaking |
0 |
0% |
|
No formal enforcement action |
28 |
93.3% |
The absence of prohibitions under the SM&CR framework is notable. The FCA has, however, separately prohibited six individuals for serious non-financial criminal convictions (indictable offences) from 2022–24, increasing to 13 for 2024–25.
This demonstrates the regulator’s willingness to use its fit and proper powers outside of the SM&CR enforcement track where criminal conduct is established.
Active cases analysis
The table below shows the 23 open senior manager investigations during the period 2022 to November 2024.
|
Primary Issue |
Cases |
% of open caseload |
|
Individual – honesty, integrity and reputation |
7 |
30% |
|
Individual – senior manager failings |
3 |
13% |
|
Misleading statements |
3 |
13% |
|
Systems and controls |
3 |
13% |
|
Fraud against consumer |
2 |
9% |
|
Threshold condition – suitability |
2 |
9% |
|
CASS |
1 |
4% |
|
Individual – non-disclosure |
1 |
4% |
|
Individual – non-financial misconduct |
1 |
4% |
|
Total |
23 |
100% |
Key takeaways for firms
Honesty and integrity is the dominant concern
With seven of 23 active cases (30%) citing individual honesty, integrity and reputation as the primary issue, the FCA's scrutiny goes beyond policy compliance.
This has direct implications for how firms conduct fit-and-proper assessments, manage SMF appointment processes, and handle regulatory references. A clean compliance framework is not sufficient if individual conduct is in question.
Formal action is rare, but investigation carries its own burden
The 93% no-action closure rate might appear reassuring on its face. However, being subject to an active FCA enforcement investigation carries significant practical consequences, including reputational exposure, legal costs, management distraction and potential impact on PRA/FCA approvals.
The deterrent effect of the SM&CR enforcement regime operates through the investigation process, not just final notices.
Non-financial misconduct is an active enforcement area
One active investigation relates to non-financial misconduct (NFM), and three cases were closed in 2023 with no action. The FCA separately prohibited six individuals for serious criminal conduct in 2024 and a further 13 in 2025, reinforcing that the regulator will use fit and proper powers even where formal SM&CR enforcement does not proceed.
Firms should ensure NFM policies are operational, not merely documented, and that reporting lines for concerns are clearly established.
