UK FCA, PRA Issue Consultations on Phase 2 SMCR Reforms
The FCA and PRA have released new consultation papers on the next phase of the Senior Managers and Certification Regime, signaling significant upcoming regulatory changes for UK financial firms.
The Senior Managers and Certification Regime (SMCR) is the UK’s core regulatory framework governing senior executives in the financial sector. The FCA and PRA have issued new consultation papers (FCA CP26/37 and PRA CP14/26) outlining Phase 2 reforms that aim to tighten duty‑to‑behave provisions, broaden admissible‑explanation requirements, and refine certification and sanction procedures for senior managers. These proposals seek to close gaps identified by recent disruptions and enhance oversight of executive conduct.
The consultations are critical for all firms with senior‑manager status, potentially expanding the scope of duties, altering certification protocols, and granting regulators new red‑lining powers. Firms should review the papers, assess governance impacts, and consider interim adjustments to policies.
The consultation period ends mid‑2027, after which final rules will be published. Clients and counsel must monitor outcomes to ensure compliance and mitigate supervisory risk.