UK regulators propose streamlining senior managers regime to cut firms' compliance costs

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UK regulators streamline senior managers regime

Highlights

FCA and PRA propose removing regulator pre-approval for roles like Chief Actuary and Risk/Audit Chairs, shifting to firm notification and responsibility for fit and proper checks.
Plans include abolishing the Certification Regime and related admin for about 139,000 staff below senior manager level, raising reporting thresholds, and simplifying conduct rule training.
Consultation closes 22 January, with policy expected in 2027 after legislative changes, aiming to reduce compliance costs, support recruitment, and bolster UK financial sector competitiveness.

Consultation sets out lighter approval requirements

As reported by Bank of England, citing the Prudential Regulation Authority, the PRA and the Financial Conduct Authority have opened parallel consultations on plans to simplify the Senior Managers and Certification Regime, which was created 10 years ago to strengthen accountability among senior decision-makers in regulated firms.

Under the proposals, regulator pre-approval would no longer be required for a range of functions, including Chief Actuaries and the Chairs of Risk and Audit Committees. Firms would instead notify regulators directly about those appointments, while remaining responsible for confirming that candidates are fit and proper.

The regulators also propose removing the Certification Regime and related administrative requirements for about 139,000 people below senior manager level, who are currently subject to annual certification checks and inclusion on the Financial Services Register. They also want to raise the threshold for reporting conduct rule breaches for most staff below senior manager level and streamline conduct rule training requirements.

Certain senior roles, including CEOs, CFOs and Chairs, would still require regulator pre-approval and fit and proper assessments before appointment. Regulators would also retain the power to require pre-approval for roles that would otherwise move to notification in higher-risk cases.

Growth focus and implementation timeline

Katharine Braddick, Deputy Governor for Prudential Regulation and chief executive of the PRA, says the proposals keep checks in place for the most important roles while reducing unnecessary administrative burdens, giving firms more room to invest in growth-focused activity and greater flexibility when onboarding senior talent.

Sarah Pritchard, Deputy CEO of the FCA, says the regime has improved accountability and governance across financial services, but that similar outcomes can be achieved through a more streamlined framework. The regulators say the changes would help firms redirect resources toward customer and market outcomes, recruitment, innovation and investment, supporting UK competitiveness.

Some of the reforms require legislative change, but the consultations are now open until 22 January so the FCA and PRA can move quickly once legislation is passed. Policy is expected to follow in 2027, and the proposals were announced as part of Mansion House speeches by Braddick and FCA chief executive Nikhil Rathi.

In her Mansion House speech, Braddick also set out a five-year strategy for the PRA focused on financial sector resilience, the regulator's growth and competitiveness objective, innovation in data and technology, and greater transparency.

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