The FCA Just Cut SM&CR’s Certification List by 15%. Here Is the Question Nobody Is Asking.
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The FCA and PRA have confirmed changes to the Senior Managers and Certification Regime. Fewer certified persons. Longer approval windows. Higher thresholds before enhanced standards kick in. The press release calls it “streamlining.” The industry has broadly welcomed it as a pragmatic response to a regime that, in some corners, had become a paperwork exercise.
Both of those things can be true. And both of them can coexist with a more uncomfortable question: but does less certification mean more risk, or less?
What the Changes Actually Say
Let us start with the facts. The FCA and PRA have confirmed:
A 15% reduction in the number of roles subject to certification requirements. Fifteen percent is a material reduction in the population of individuals the regime formally covers.
Extended approval timeframes means firms will have more runway to get senior manager approvals through, which addresses a genuine operational problem: the old regime had created bottlenecks that served nobody well.
Higher thresholds for enhanced standards will also mean that fewer firms will need to meet the most demanding tier of the regime. The rationale is proportionality: a mid-size asset manager should not face the same administrative burden as a systemically important bank.
The Accountability Trimmed, Not Removed
Here is what the FCA is at pains to make clear, and what compliance professionals should be equally clear about internally: removing a role from the certification list does not remove accountability from the person in that role.
Consumer Duty still applies. Individual conduct obligations still apply. The FCA’s ability to take action against individuals has not changed. What has changed is the formal certification wrapper around a subset of roles.
The distinction matters enormously. If a firm responds to these changes by treating de-certified roles as low-risk roles, that is a misreading of the reform. The accountability framework has been rationalised. It has not been abolished.
This is the question compliance teams should be asking right now: do our people in newly de-certified roles understand that their obligations have not materially changed?
Where the Culture Risk Actually Lives
The honest concern about reducing the certification population is more cultural than administrative.
Certification, at its best, was never just about the paperwork. It was a signal: this person has been assessed, their fitness and propriety checked, their responsibilities documented. For the individual, it created a conscious awareness of their regulatory standing. For the firm, it created a documented record.
Remove that signal, and some of what it produced goes with it. Not deliberately, not maliciously, but through the gradual drift that organisations are prone to when the formal markers of accountability become less visible.
The most sophisticated firms will respond to these changes by strengthening their internal accountability frameworks rather than relaxing them. The least sophisticated will treat a 15% reduction in certified persons as a 15% reduction in compliance overhead and move on.
What Compliance Teams Should Do Now
The regulatory direction of travel is clear: the FCA wants a regime that is proportionate, outcomes-focused, and less encumbered by process for its own sake. It’s a reasonable and achievable goal.
The practical implication for compliance teams is that the burden of demonstrating accountability is shifting slightly from the regulatory wrapper to the firm’s own governance and culture. Where certification previously provided an external check, firms now need internal frameworks that perform the same function.
Three things worth doing now:
First, map which roles are leaving the certification population and review what accountability documentation exists for those individuals outside the certification process. If the answer is “very little,” that is a gap.
Second, review training and competency frameworks. The cessation of certification does not mean those individuals stop needing structured oversight. It means the structure needs to come from somewhere else.
Third, document the rationale. When the FCA comes calling (and for any firm of scale, it likely will) you want to be able to show that the decision to de-certify a role was an active, considered decision rather than a passive response to a change in the rules.
The SM&CR was always a means to an end. The end was a culture of individual accountability in financial services. That end has not changed, it’s the means that have been adjusted.
The question is now whether firms adjust with them, or simply take the reduction in the certified population as the gift it superficially appears to be.
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