FCA, PRA streamline senior manager accountability rules
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have confirmed reforms to streamline the Senior Managers and Certification Regime (SM&CR). These changes, effective today, aim to reduce compliance costs and boost flexibility for firms by simplifying processes.
Simplifying SM&CR processes
The reforms will provide firms with greater flexibility and reduced compliance burdens under the Senior Managers and Certification Regime (SM&CR).
Key changes include extending deadlines for submitting senior manager applications during temporary changes and for reporting responsibility updates.
The regulators will also remove the requirement to certify individuals for multiple overlapping functions, which is expected to reduce the total number of certification roles by approximately 15 percent.
Annual 'fit and proper' checks for individuals will be streamlined.
Furthermore, the thresholds for larger, more complex firms to meet enhanced standards will be raised by 30 percent, ensuring proportionality.
The validity period for criminal record checks for senior manager applications will also be increased, and firms will have more time to update the directory of certified staff.
These measures are designed to make the regime easier to navigate and reduce administrative overhead.
Phased reforms and future plans
These changes mark the first phase of a broader reform package.
The government's consultation response outlines further changes, including the removal of the Certification Regime from legislation for less senior roles.
It also proposes granting regulators more flexibility to reduce the number of senior management functions (SMFs) requiring pre-approval.
The FCA and PRA plan to consult on wider changes later in the year, leveraging this increased legislative freedom.
These upcoming reforms are part of the "Leeds reforms," which aim to halve the SM&CR's regulatory burden on firms.