UK financial regulators have proposed substantial changes to the Senior Managers and Certification Regime, estimating that regulated companies could save approximately £2bn over ten years through reduced administrative requirements. The reforms would remove annual certification obligations for around 139,000 people while retaining pre-approval for the most senior positions.
The Bank of England‘s Prudential Regulation Authority and the Financial Conduct Authority opened parallel consultations on 22 October. Their proposals address the regime introduced a decade ago to improve individual accountability following misconduct and governance failures in financial services. The stated objective is to remove unnecessary checks without reducing standards of conduct.
Under the changes, some roles currently requiring regulatory pre-approval, including chief actuaries and chairs of risk and audit committees, would instead be subject to notification. Firms would remain responsible for assessing whether those appointees are fit and proper. Regulators would preserve the ability to demand pre-approval for otherwise notified appointments in higher-risk circumstances.
CEOs, CFOs and board chairs would continue to require formal regulatory approval. The proposed removal of the Certification Regime for a large group of employees below senior manager level would eliminate associated annual certification and register requirements. Companies would nevertheless remain responsible for staff competence and suitability under other applicable rules.
The proposals also include raising the threshold for reporting breaches of conduct rules by staff below senior manager level and simplifying the associated training requirements. Regulators say this would help firms concentrate attention on more significant misconduct, although compliance teams would still need reliable ways of identifying and escalating behaviour that warrants investigation.
The savings estimate covers a ten-year period, not an annual £2bn reduction. Actual effects will vary across banks, insurers, investment managers and other regulated entities depending on their structure, staffing and existing systems. Some organisations may reduce paperwork or external legal costs, while others may repurpose compliance teams towards more risk-based monitoring rather than cutting headcount.
The PRA expects the reforms to reduce pre-approvals within its regime by 43%. Regulators also describe the proposals as building on changes implemented in April 2026, including simpler arrangements for overlapping functions and more flexibility when a senior management position changes unexpectedly.
There is a distinction between simplifying a regulatory process and reducing accountability. Senior people would still be subject to conduct expectations and potential enforcement, and firms could not rely on a more straightforward appointment process to excuse failures in governance. Internal evidence of recruitment checks, competence assessments and management decisions will remain important where regulators later scrutinise an incident.
For growing financial companies, the reforms could make some senior appointments faster and reduce the administrative requirements linked to expansion. Their practical impact will also depend on systems that maintain clear responsibility for different business activities. Removing duplicate reporting is most valuable when it does not make it harder for a company or its regulator to understand who made a consequential decision.
Regulatory change may also alter the focus of supervisory reviews. If fewer appointments require formal approval, supervisors may place greater weight on the evidence companies retain about their own fitness assessments and control processes. Companies could still need to explain why a particular individual was appointed, how conflicts were assessed and whether responsibilities were assigned clearly. A streamlined external process therefore does not eliminate the need for disciplined internal governance. Independent evidence of those checks will remain important in supervisory reviews.
The consultations close on 22 January 2027, with some proposed changes requiring legislation before they can take effect. The regulators estimate cumulative industry compliance-cost savings of about £2bn over ten years, rather than an immediate annual benefit. Companies should therefore treat the announced measures as proposals and continue following current requirements until the relevant rules and legal provisions are formally changed.
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