What SMCR Stands For: Pillars, Covered Firms, and 2026 Changes

SMCR stands for the Senior Managers and Certification Regime, the accountability framework the UK’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) apply to banks, insurers, and nearly all other regulated financial firms.¹ It replaced the older Approved Persons Regime and is built to make individuals, not just firms, answerable when something goes wrong.

The regime came out of the 2007–2008 financial crisis and the conduct scandals that followed. Parliament legislated in December 2013, and the FCA and PRA rolled the new rules out to banks from March 2016.¹

The Three Pillars

SMCR has three parts that work together. A senior managers regime for the most influential roles, a certification regime for other staff whose work could cause serious harm, and a set of conduct rules that reach nearly every employee at a regulated firm.

Senior Managers Regime

The first pillar covers people who hold Senior Management Functions. No one can start in one of these roles without prior approval from the FCA or PRA. Each senior manager has a Statement of Responsibilities that spells out exactly which parts of the business they oversee, so if something goes wrong regulators can trace it to a named individual.²

Firms also have to allocate a fixed list of prescribed responsibilities among their senior managers. These include responsibility for the firm’s compliance with the senior managers regime itself, responsibility for the certification regime, and responsibility for providing regulatory references when staff move between firms.³ The design is meant to close off the “nobody was in charge” defense that frustrated earlier enforcement.

The teeth sit in Section 66A of the Financial Services and Markets Act 2000. A senior manager can be found guilty of misconduct if the firm breaches a regulatory requirement, the manager was responsible for the relevant area, and the manager cannot show they took reasonable steps to prevent the breach.⁴ The burden is on the manager to demonstrate reasonable steps, not on the regulator to prove negligence. In the most serious cases the FCA can also ban an individual from the industry.⁵

Certification Regime

The second pillar picks up employees who aren’t senior managers but whose roles could still cause significant harm to the firm or its customers. Investment advisers, portfolio managers, and people involved in algorithmic trading are typical examples. These individuals don’t need direct regulator approval, but their firm must certify them as fit and proper before they can perform the role.⁶

Under Section 63F of the Financial Services and Markets Act 2000, a certificate is valid for 12 months, so firms have to reassess and recertify every year. The certificate has to state that the firm is satisfied the person is fit and proper and describe the aspects of the business they’ll be involved in.⁷

Fitness and propriety is assessed across three areas: honesty, integrity, and reputation; competence and capability; and financial soundness.⁸ If a firm decides not to certify someone, it has to give written notice explaining why. In practice, losing certification means the person cannot perform the role.

Conduct Rules

The third pillar has the widest reach. Six conduct rules apply to nearly all employees at a regulated firm:⁹

Act with integrity.
Act with due skill, care, and diligence.
Be open and cooperative with the FCA, PRA, and other regulators.
Pay due regard to customer interests and treat customers fairly.
Observe proper standards of market conduct.
Act to deliver good outcomes for retail customers.

Four further rules apply only to senior managers. These require them to take reasonable steps to ensure their part of the business is properly controlled, that it complies with regulatory requirements, that any delegation goes to an appropriate person with proper oversight, and that they disclose information the regulators would reasonably expect to know.¹⁰

Firms must report to the FCA when they take disciplinary action against an employee for a conduct rule breach, whether that’s a formal warning, suspension, dismissal, or clawing back pay.⁹

Which Firms Are Covered

SMCR was rolled out in stages. Banks, building societies, credit unions, and major investment firms came in first in March 2016. Insurers followed in December 2018. Solo-regulated firms, meaning those overseen only by the FCA, were brought in by December 2019. Since then it has applied to virtually all regulated financial services firms in the UK.²

To keep the load proportionate, the FCA sorts solo-regulated firms into three tiers. Enhanced firms are the larger or more complex ones and face additional requirements. Core firms get the standard set of requirements. Limited Scope firms have reduced obligations reflecting their size. A firm’s tier determines which senior management functions it has to fill, which prescribed responsibilities it has to allocate, and how much documentation it maintains.²

What’s Changing in 2026

In April 2026, the FCA and PRA finalized a package of reforms meant to reduce administrative burden while keeping the accountability structure intact.¹¹ The changes are landing in two stages, with the first set effective 24 April 2026 and further changes on 10 July 2026.

The operational adjustments in phase one include:

The 12-week rule for interim senior managers now requires firms only to submit the replacement application within that window, rather than obtain approval; the interim person can continue in the role until the regulator decides and is subject to the senior manager conduct rules in the meantime.¹²
Firms have up to six months to notify regulators of changes to Statements of Responsibilities, and only the latest version needs to be submitted if several changes stack up.¹³
Criminal records checks on senior management candidates are valid for six months rather than three, and a new check isn’t needed when an existing senior manager applies for a different role in the same group.¹²
Certification can be issued by email rather than on paper and folded into existing annual appraisal processes.¹³
From 10 July 2026, the FCA is removing roughly 15% of certification roles that overlapped with other certified functions.¹³

A larger structural change is still being debated. HM Treasury has consulted on removing the certification regime entirely by repealing Sections 63E and 63F of the Financial Services and Markets Act 2000. If enacted, this would end the annual certification requirement, the fit-and-proper checks firms currently perform for certified staff, and the record-keeping that goes with them, leaving the FCA and PRA to build something more flexible under their own rulemaking powers.¹⁴ Phase 2 needs primary legislation, so the timing depends on Parliament. The full certification regime remains in force for now.

1
Financial Conduct Authority. Senior Managers and Certification Regime
2
Financial Conduct Authority. Senior Managers Regime
3
FCA Handbook. SYSC 24.2 Allocation of FCA-Prescribed Senior Management Responsibilities – Main Allocation Rules
4
Legislation.gov.uk. Financial Services and Markets Act 2000 – Section 66A
5
FCA Handbook. DEPP 6 Penalties
6
Financial Conduct Authority. The Senior Managers and Certification Regime – Guide for FCA Solo-Regulated Firms
7
Legislation.gov.uk. Financial Services and Markets Act 2000 – Section 63F
8
Financial Conduct Authority. Fitness and Propriety
9
Financial Conduct Authority. Conduct Rules
10
FCA Handbook. COCON 2.2 Senior Manager Conduct Rules
11
Bank of England. FCA and PRA Confirm Changes to Streamline Senior Manager Accountability and Boost Growth
12
Bank of England. PS12/26 – Review of the Senior Managers and Certification Regime Phase 1 Policy Statement
13
Financial Conduct Authority. PS26/6 – Senior Managers and Certification Regime Review
14
GOV.UK. Reforming the Senior Managers and Certification Regime – Consultation