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The FCA and PRA have proposed changes to the SM&CR that would remove the Certification Regime for staff below senior-management level. The consultation runs until January 2027, and the regulators estimate the package could save financial firms £2 billion over the next decade.
Annual sign-offs would disappear
About 139,000 employees would no longer need regulatory sign-off each year or appear in the FCA public Directory. Firms would still have to assess staff competence, suitability and conduct, while senior managers in key positions would continue to need regulatory approval. Any changes would follow final policy and legislative steps.
Appointments and conduct rules change
For some roles, firms would notify regulators rather than seek approval in advance. Risk and Audit Committee Chairs, along with Chief Actuaries, would fall into this group, although regulators could require prior approval if they judged an appointment to be high-risk. Pre-approval would remain for Chairs, CFOs and CEOs.
Separate proposals would raise the threshold for reporting conduct-rule breaches involving most staff below senior-manager level, and simplify training requirements. In digital assets, the FCA recently finalised its proposed cryptoasset regime and adjusted stablecoin requirements after industry feedback, as Finance Magnates reported. It reduced the planned capital requirement for stablecoin issuance from 2% to 1% and removed some proposed public-disclosure obligations, while keeping the framework's central rules.
European reporting remains distinct
ESMA has recommended a long-term approach for transaction reporting in which data is submitted once, with the aim of reducing duplication and simplifying reporting infrastructure. Legislative changes and a phased rollout would be needed. The EU's MiCA regime continues to set substantial authorisation and prudential requirements for crypto firms, contrasting with the UK's revised stablecoin framework.
The integration question
Removing regulatory certification would not remove firms' responsibility for staff assessment. Which internal controls currently support yearly sign-off and Directory updates, and what records will firms retain if those external steps are removed? The proposals do not set out a replacement process for those operational tasks.
Appointment changes also raise workflow questions for compliance and operations teams. Which roles will trigger notification, and how will firms flag cases that may still require prior approval? Mapping those decision points against current approval and conduct-reporting processes could help firms identify what needs to change when the reforms take effect.
