FCA, PRA and HMT plan to cut red tape to help boost growth

Amongst the various reforms intended to boost growth announced by the Chancellor in her 15 July Mansion House speech (referred to as the "Leeds reforms") she committed to streamlining the Senior Managers and Certification Regime (SMCR). 

Three consultations have now been launched:

1. CP25/21: Senior Managers and Certification Regime Review Consultation Paper;
2. CP19/25: Review of Senior Managers and Certification Regime (SMCR); and
3. HM Treasury: Reforming the Senior Managers & Certification Regime

Some of the proposals overlap and certain will be made redundant if the Certification Regime is removed, for example.

The consultations close on 7 October 2025.

Overview of the proposals

Proposals by HMT include:

• The removal of the Certification Regime (although it appears this is intended to pave the way for the regulators to introduce a more flexible alternative).
• Reducing the number of Senior Manager roles requiring prior approval.

The proposals of the FCA and PRA diverge in a number of places, but both propose a two-phase approach and, as part of the first phase, common proposals include:

• Changes to the 12-week rule which allows someone to temporarily cover a senior manager role without approval. These include changing the rule to allow firms to submit an application for approval within 12 weeks rather than requiring a decision to be made within this timeframe.
• Streamlining requirements in relation to submitting Statements of Responsibility, including to allow longer to submit an updated version following significant changes or the last submission.
• Extending the validity period of criminal record checks to six months.

The FCA has proposed changes to its guidance including:

• To clarify that suspension pending an investigation regarding a potential Conduct Rule breach does not trigger reporting requirements under SUP 15.11 in order to avoid unfair consequences where the investigation concludes there was no breach or it was not serious enough to justify disciplinary action
• Guidance on regulatory references, including:
  • references should not be based on unproven allegations or mere suspicions
  • firms should not include information about suspected misconduct unless the firm has taken sufficient steps to verify the information
  • however, the fact an employee leaves before the investigation is complete does not necessarily mean the firm should omit the suspected misconduct. 

What other reforms or initiatives are on the horizon?

• An industry-led campaign to explain the benefits of investing savings in stocks and shares to encourage "informed risk taking".
• Reform of the Consumer Duty regime, such as whether to carve out impact on wholesale firms such as investment banks and asset managers.
• Reform of the ring-fencing regime as part of a review by the Financial Policy Committee of bank capital requirements.
• A combined FCA and Financial Ombudsman Service consultation on reform to the redress system building on the government's proposals (which were published on the same day as this consultation).
• Cutting financial red tape on overseas investment into the UK.
• Better access to finance and other support for Fintech start ups.

Get in touch

To find out more or discuss any questions please contact Sonya Zywko, Alan Hughes and Claire Holland.