The Senior Managers & Certification Regime (SMCR): A Comprehensive Overview

The Senior Managers & Certification Regime (SMCR) shapes how every FCA-regulated firm in the UK appoints, approves and holds accountable its most senior people. For anyone recruiting into a regulated business, it is not background detail — it determines who needs regulatory pre-approval before they can start, how long that takes, and what the firm must document along the way. This guide explains the regime as it now operates, including the reforms that took effect in April 2026 and the further changes now out for consultation, and what each part means in practice when you are making a senior appointment into an FCA-regulated firm.

It is written for boards, chief executives, HR directors and founders who need to make a regulated hire and want to understand where the regime affects the search, the offer and the start date. It is not legal advice, and because the rules are changing in stages, any firm making an appointment should check the current position with its compliance function or advisers at the point of hire.

What the SMCR Is, and Why It Exists

The SMCR is the framework the FCA and PRA use to hold individuals — not just firms — personally accountable for conduct and governance in financial services. It grew out of the 2008 financial crisis and the Parliamentary Commission on Banking Standards, which found that unclear lines of responsibility had let failures go unowned. Introduced for banks in March 2016 and extended to solo-regulated firms in December 2019, it now applies across the sector: asset managers, insurers, consumer credit firms, payment and e-money firms, and more. Its purpose is simple to state — make it clear who is responsible for what, and hold them to it — even though complying with it is not.

In practice, the regime does three things a hiring firm feels directly. It decides which roles need the regulator’s approval before the person can act. It requires the firm to vouch for the fitness and propriety of the people it puts into important roles. And it sets behavioural standards that apply to almost everyone in the business. Each of those has a bearing on how a senior search is scoped, how candidates are assessed and how long the whole process takes from first conversation to first day.

The Three Pillars

1. The Senior Managers Regime

The most senior decision-makers hold Senior Management Functions (SMFs) — roles such as the CEO (SMF1), Chair (SMF9), Head of Compliance (SMF16) and MLRO (SMF17). Anyone appointed to an SMF must be approved by the regulator before they take up the role, and each holds a Statement of Responsibilities setting out exactly what they own. The defining principle is “reasonable steps”: a Senior Manager can be held personally accountable if a breach occurs in their area and they did not take reasonable steps to prevent it. For a hiring firm, the practical consequence is that an SMF appointment is not complete on signing — it is complete on regulatory approval, which has to be planned into the timeline.

The control functions are where most firms feel this first. A Head of Compliance (SMF16) or an MLRO (SMF17) is a pre-approved role even in a small firm, and the regulator will look closely at whether the candidate has the experience, independence and time to do the job properly. At board level, a Chair of a regulated firm is assessed on the same basis, with particular attention to whether they can lead challenge rather than simply preside.

2. The Certification Regime

Below the SMFs sits the Certification Regime, covering individuals who are not Senior Managers but whose roles could cause significant harm to the firm or its customers — certain risk-takers, advisers and customer-facing specialists. These people do not need regulator pre-approval, but the firm must itself assess and certify them as fit and proper, and re-assess them. This is the part of the regime under the most change — see the reforms below. Our guide to the Certification Regime versus the Senior Managers Regime sets out where the line between the two currently falls.

3. The Conduct Rules

The Conduct Rules set baseline standards of behaviour and apply to almost everyone in a regulated firm. There are Individual Conduct Rules for all staff and tougher Senior Manager Conduct Rules for SMF holders, covering integrity, due care, openness with regulators and treating customers fairly. They are the regime’s cultural floor. For a hiring firm, they also matter as evidence: a candidate’s record against the Conduct Rules at a previous employer can surface through regulatory references, which is one reason those references now carry real weight in a senior process.

The 2026 Reforms: What Has Changed

The SMCR is being reformed in phases to reduce the burden on firms while keeping individual accountability intact. The first phase was finalised by the FCA and PRA on 22 April 2026, in FCA PS26/6 and PRA PS12/26, with most changes taking effect from 24 April 2026. The changes most relevant to hiring firms are:

• The 12-week rule is now a submission deadline: where someone steps in to cover an SMF, the firm now has 12 weeks to submit the application rather than to obtain approval. The person can continue to act while the regulator decides, and the Senior Manager Conduct Rules apply to them in the meantime.
• Faster regulatory references: firms are expected to respond to a regulatory reference request within four weeks, rather than six — intended to speed up senior appointments.
• Criminal records checks eased: checks are now valid for six months rather than three, and are not required when an approved Senior Manager moves to an SMF within the same firm or group.
• Enhanced-firm thresholds raised: from 10 July 2026, the thresholds that place a solo-regulated firm in the enhanced category went up by around 30% (for example, assets under management from £50bn to £65bn), with a mechanism to adjust them periodically.
• Less duplication in documents: firms now have longer to notify changes to Statements of Responsibilities and Management Responsibilities Maps, and some overlapping certifications have been removed.

Alongside the rule changes, the FCA has committed to faster decisions. It set a target of completing at least half of Senior Manager applications in 35 days or fewer, measured from January 2026. The statutory backstop has not yet changed: the regulators still have up to three months to determine a complete application. The Government intends to cut that to two months, but that requires legislation and should be treated as a proposal until it is in force.

The core principle of senior-leader accountability is being kept throughout; the reforms are about proportionality, not relaxation. Because the detail is still moving, a firm making a senior regulated appointment should confirm the current position at the point of hiring rather than relying on any single summary. We cover the practical effect on scheduling in more depth in our article on how the SMCR is changing the senior appointment timetable.

Phase 2: What Is Being Proposed

The second phase is larger and is still at consultation stage. On 22 October 2026 the FCA published CP26/37 and the PRA published CP14/26. Both consultations close on 22 January 2027, and the FCA expects to publish final rules in the first half of 2027. None of the following is in force yet. The main proposals are:

• Removing the Certification Regime. Firms would no longer certify staff as fit and proper on appointment and annually; the regulators would instead rely on their wider competence and suitability rules.
• Fewer pre-approved roles. Some SMFs would be removed and others would become notified rather than pre-approved, so the firm tells the regulator of the appointment instead of waiting for approval.
• A simpler application process and higher thresholds for the enhanced regime, taking more firms out of it.
• Less ongoing paperwork. Routine submission of Statements of Responsibilities and Management Responsibilities Maps would stop, and the FCA Directory of certified persons would be retired.
• Simpler Conduct Rule training and a higher threshold for reporting breaches by staff who are not Senior Managers.

Several of these depend on primary legislation. The Government introduced the Financial Services and Markets Bill in May 2026, which HM Treasury says is designed to halve the overall burden of the SMCR. The Bill proposes removing the Certification Regime from the Financial Services and Markets Act 2000 and giving the regulators more freedom over which roles need pre-approval. Until the Bill is passed and the regulators’ final rules are published, firms should keep operating the Certification Regime as it stands today.

For hiring firms, the direction is clear even if the detail is not. Fewer roles are likely to need pre-approval, and the ones that remain — chief executive, finance, risk, compliance, financial crime and the chair — will be under at least as much scrutiny as before. Firms should plan current appointments on the rules in force now, and avoid delaying a needed hire on the assumption that a role will soon fall outside the regime.

What the SMCR Means When You Hire

For an employer, the SMCR turns a senior regulated appointment into a process with regulatory gates, not just a hiring decision. Three things follow. First, timeline: an SMF hire cannot start until approved, so the approval window has to be built into the plan — and where a gap must be covered, that is often the case for an interim or urgent SMF appointment. Second, candidate assessment: fitness and propriety is not a box-tick but a genuine test of competence, honesty and financial soundness, and getting it wrong carries regulatory risk for the firm. Third, the field is narrower than it looks — the pool of people who are both right for the role and credibly approvable for a given SMF is smaller than a general senior search, which is exactly where specialist compliance and risk recruitment experience earns its place.

It also changes what a good shortlist looks like. A candidate who interviews well but has never held a comparable approved role, or who has gaps in their regulatory references, may still be the right appointment — but the firm needs to know that early and be ready to explain to the regulator why the person is competent for the function. Testing approvability alongside capability from the first interview saves weeks later.

Planning the timetable

A realistic plan for an SMF hire runs in stages: search and selection; offer, subject to approval; the candidate’s notice period; regulatory references and criminal records checks; preparing the application and Statement of Responsibilities; and the regulator’s assessment, which may include an interview for more senior roles. Several of these can run in parallel. Starting references and checks as soon as an offer is accepted, and drafting the Statement of Responsibilities while the candidate is serving notice, usually takes the most time out of the process. Where the role is already vacant, interim cover — for example an interim Chief Compliance Officer — keeps the function running while the permanent appointment goes through.

Hiring Into a Regulated Firm

Appointing SMFs and certified staff well means understanding both the role and the regime around it — who needs pre-approval, how long it takes, and who will actually satisfy a fit-and-proper assessment. Our compliance and risk recruitment practice focuses on exactly these appointments, from heads of compliance and MLROs to chief risk officers, alongside regulated-firm chief executives, executive directors and board members. If you are planning a senior regulated hire, we can help you scope it against the current regime and reach the people who fit it.

Risk leadership is a good example of why the brief matters. The chief risk officer function is defined as much by its independence as by technical skill, and the regulator will look at reporting lines and board access as well as the individual — a point we cover in our guide to SMF4 and the chief risk officer function. The same applies at board level: independent directors on a regulated board need to be able to challenge executives on risk and conduct, which is why financial services non-executive recruitment tests that ability explicitly rather than assuming it.

Enhanced Firms and the Documentation Burden

Not every firm faces the same weight of obligation. The SMCR applies proportionately, with the heaviest requirements falling on ‘enhanced’ firms — the largest and most complex — which must maintain fuller documentation, including a management responsibilities map showing how accountability fits together across the business. Core and limited-scope firms carry lighter obligations. For a hiring firm this matters in two ways: it shapes how much sits on each Senior Manager’s Statement of Responsibilities, and it affects how carefully a new appointment has to be slotted into the existing map so that no responsibility is left unowned or doubly owned.

The raised thresholds from July 2026 mean some firms that were enhanced are now core, and the Phase 2 proposals would raise the thresholds again. A firm that has moved category should check whether its governance documents and the shape of its senior roles still make sense. Getting that mapping right at the point of hire avoids a governance gap later, and both phases of the reforms include measures aimed at reducing duplication between these internal governance documents.

Common Pitfalls in Regulated Hiring

Several avoidable mistakes recur when firms appoint into SMCR roles. The most common is treating regulatory approval as a formality bolted on at the end, rather than a gate that governs the start date — which leaves a leadership gap when approval takes longer than hoped. Another is a thin fitness-and-propriety assessment that later fails to withstand scrutiny, exposing the firm. A third is appointing on capability alone without testing whether the candidate is credibly approvable for that specific function, only to stall at the regulator. And a fourth is neglecting the responsibilities map, so a departing Senior Manager’s accountabilities are not cleanly reassigned.

Two newer pitfalls follow from the reforms. One is assuming that because a change has been proposed, it already applies — the Certification Regime, for example, remains in force until the legislation and final rules say otherwise. The other is relying on the faster target times as a guarantee; the 35-day figure is a target for half of applications, not a deadline for every case. Each of these is a process failure rather than a judgement of the candidate, and each is straightforward to design out with the regime in mind from the start of the search.

Frequently asked questions

Does every FCA-regulated firm fall under the SMCR?

Almost all FCA authorised firms do, though how much applies depends on whether the firm is limited scope, core or enhanced. Dual-regulated firms such as banks and insurers are also subject to PRA requirements.

How long does an SMF approval take?

The regulators have up to three months by law to decide a complete application. The FCA aims to decide at least half of applications in 35 days or fewer. The Government has proposed reducing the statutory period to two months, but that is not yet law.

Can someone cover an SMF role before they are approved?

In limited circumstances, yes. Under the 12-week rule, a person can cover an SMF temporarily; since 24 April 2026 the firm must submit the application within that period and the person may continue while it is decided.

Is the Certification Regime being abolished?

It has been proposed, not decided. The Financial Services and Markets Bill and the FCA and PRA Phase 2 consultations would remove it, but firms must keep certifying staff until the change takes effect.

Who is responsible for the fit-and-proper assessment?

The firm. For SMFs, the regulator also assesses the candidate, but the firm must have satisfied itself first and must keep assessing fitness and propriety after appointment.