SM&CR review phase 2: FCA proposes ending certification
CP26/37 proposes removing the Certification Regime and cutting SMF applications. It matters to every firm in the SM&CR; comments close on 22 January 2027.
What changed
On 22 October 2026 the FCA published CP26/37, the second phase of its review of the Senior Managers and Certification Regime. Changes proposed in the Financial Services and Markets Bill remove many prescriptive SM&CR requirements from legislation and leave the regulators to decide how they apply in their rules. The FCA says its proposals aim to maintain high standards of individual accountability and conduct while reducing unnecessary burden.
The main proposals are: removing the Certification Regime and retiring the Directory of certified and assessed persons; reducing the number of Senior Management Function applications by removing certain SMFs and making other roles notified; streamlining the SMF application process; raising the thresholds for the Enhanced regime so fewer firms are in it; removing ongoing submissions of Statements of Responsibilities and Management Responsibilities Maps; streamlining the Prescribed Responsibilities; and simplifying Conduct Rule training and raising the thresholds for reporting Conduct Rule matters. The paper is for all firms already in the SM&CR, including third-country branches, and firms due to come into scope, such as cryptoasset firms. It builds on the phase 1 rules in PS26/6, published in April 2026. Dual-regulated firms should also read the PRA's CP14/26. The consultation closes on 22 January 2027 and the FCA expects to publish final rules in a policy statement in the first half of 2027.
The rules it touches: SYSC 27, SYSC 24.2.1R, SYSC 25.2.1R, SUP 10C.
What to do
- Keep running the current regime, including annual certification, until final rules are published; the FCA expects a policy statement in the first half of 2027.
- Map where your firm would be affected: certified staff, SMF roles that may become notified, your Enhanced regime status, and your Statements of Responsibilities and Management Responsibilities Map.
- Decide whether to respond, and send comments through the FCA's online form by 22 January 2027.
- If you are a cryptoasset firm seeking authorisation, read PS26/13 and CP26/36 alongside CP26/37; if you are dual-regulated, read the PRA's CP14/26.
Our view
In our view this is the most significant simplification of the SM&CR since it was extended across financial services. Removing certification takes away an annual exercise, not the need to know that the people in key roles are fit and proper. We think firms that keep evidencing fitness and Conduct Rules training through their own controls will find the transition easiest, whatever the final rules say.
How this was produced: drafted automatically from the source and our FCA Handbook mirror; every Handbook reference was checked against the provision text before publication.