The UK regulators have confirmed the first phase of SM&CR reforms, set to take effect on 24 April 2026. From a more flexible 12-week rule to a 15% reduction in certification overlaps, we examine the practical implications for treasury departments and the strategic shift toward a more proportionate accountability regime.
The UK’s financial regulatory landscape has reached a pivotal juncture as the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) implement the first phase of significant reforms to the Senior Managers and Certification Regime (SM&CR). Taking effect primarily on 24 April 2026, these amendments signal a move toward a more proportionate regime, balancing robust individual accountability with a reduction in administrative friction for firms.
For treasury departments and financial leaders, understanding these technical tweaks is essential for maintaining compliance while leveraging new operational flexibilities.
Perhaps the most pragmatic change is the overhaul of the 12-week rule. Historically, firms struggled with the rigid requirement to have a Senior Management Function (SMF) application fully determined within 12 weeks of a vacancy.
Submission over Determination: Firms now have up to 12 weeks to submit a complete SMF application following an unexpected vacancy, rather than requiring final approval within that timeframe.
Extended Review Window: Regulators will have a further statutory three months to review and determine these applications, effectively doubling the timeline for complex transitions.
Conduct Rule Extension: Importantly, individuals operating under this temporary rule are now explicitly subject to the Senior Manager Conduct Rules, ensuring no accountability gap exists during interim periods.
The PRA has introduced additional guidance to clear the fog around SMF7 designations. This is particularly relevant for treasury teams in overseas groups or those with complex parent structures.
Targeted Scope: The update clarifies which individuals within a group structure, specifically controllers and their representatives who exercise significant influence over a UK firm’s day-to-day management, should fall under SMF7.
Safety and Soundness: Guidance now distinguishes between those setting group-wide strategy and those implementing strategy that affects the safety and soundness of the UK entity.
Case-by-Case Clarity: While the PRA does not expect a significant net increase in SMF7s, the new guidance provides non-exhaustive examples to help firms distinguish between those with “significant influence” and those who do not require pre-approval.
The reforms also aim to halve the administrative burden through smarter reporting and certification processes.
Form L Notifications: Any breaches of Conduct Rules by individuals operating under the 12-week rule must now be reported via the Form L notification form, rather than the standard Form C or D used for approved managers.
Reduced Overlap: The requirement to certify individuals for multiple overlapping functions has been removed, a move expected to reduce the total volume of certification roles by approximately 15%.
Bulk Submissions: Firms can now submit updated Statements of Responsibilities (SoR) periodically on a bulk basis, provided the submission occurs no later than six months after the last significant change.
From a treasury and finance perspective, these changes reflect a broader strategy to boost UK market competitiveness. By raising the “Enhanced” firm thresholds by 30%, many mid-tier firms may find themselves moved back into the simpler “Core” regime. For example, the assets under management threshold has increased from £50bn to £65bn, and the regulated consumer credit lending revenue threshold has risen from £100m to £130m.
However, this is only Phase 1. With a second phase of broader legislative reforms expected later in 2026, potentially including the total removal of the Certification Regime from primary legislation, treasury leaders should view these April changes as the start of a multi-year shift toward regulatory efficiency.
Key Dates to Watch:
24 April 2026: Most Phase 1 changes take effect.
10 July 2026: Improvements to regulatory reporting and the 30% threshold increases apply.
1 September 2026: Changes aligning with non-financial misconduct rules (PS25/23) take effect.