UK Keeps CEO Checks While Dropping 139,000 Certificates

UK regulators proposed on 22 October 2026 to scrap annual certification for about 139,000 financial-services staff below senior-manager level. The Bank of England and the Financial Conduct Authority said the Senior Managers and Certification Regime changes would save firms around £2 billion over 10 years.

They unveiled the package in Mansion House speeches at the City of London’s annual dinner, and said high standards of individual accountability would remain unchanged.

139,000 Certified Staff Below the Board

The headline fight over City bosses misses most of the people in the proposal. The Bank of England’s joint note says the plan would end annual certification checks for around 139,000 individuals below senior-manager level and take them off the Financial Services Register.

Those staff are the Certification Regime, the middle layer built after 2008 so firms, not the regulator, would attest each year that people in harm-capable jobs were fit and proper. The PRA’s own consultation puts about 7,700 of them inside its slice of the regime. The rest sit with the FCA across banks, insurers, asset managers, brokers and other solo-regulated firms.

Chief executives, finance chiefs and chairs would still need regulator pre-approval, including fit-and-proper tests, before they take the job. Chief actuaries and the chairs of risk and audit committees would move to a notification system, with firms remaining responsible for judging candidates. Regulators would keep a power to demand pre-approval for an otherwise notified role in a high-risk case.

The SM&CR was sold as a way to name the person on the hook. The senior-manager part of that bargain stays. The annual paper that covered the much larger group below them is what the consultations would take away.

What the Phase 2 Package Would Change

The PRA and FCA opened parallel consultations on 22 October 2026. The FCA’s Phase 2 SM&CR consultation paper (CP26/37) sits beside the PRA’s CP14/26. Feedback is due by 22 January 2027, and the FCA expects to publish a policy statement in the first half of 2027.

Both papers call this the most substantial rewrite since the regime began. It builds on Phase 1 rules that took effect on 24 April 2026, which cut duplicate certification for overlapping functions by about 15% and raised many enhanced-firm thresholds by 30%.

WHAT STAYS AND WHAT GOES

The PRA says the package is meant to meet a joint pledge with the FCA and the Treasury to cut the regime’s burden by 50% and cut senior-manager pre-approvals by 40%. It expects to hit the 40% target with a 43% drop in its own pre-approvals and to halve the burden of its regime. For FCA enhanced solo-regulated firms, about 15% of applications would become notifications, two SMF roles would go, and the papers claim a further 19% saving.

OTHER MOVES IN THE SAME PAPERS

• Temporary cover: The old 12-week rule for stand-in senior managers would stretch to 18 weeks, with firms still expected to file as soon as they can.
• FCA enhanced firms: Fewer firms would sit in the enhanced tier once thresholds rise again on top of the 30% lift already made in April.
• Crypto firms: The FCA says cryptoasset firms due to enter the SM&CR are in the audience for Phase 2, just as the Certification Regime is marked for removal.
• Forms and training: SM&CR forms would be cut back, and conduct-rule training requirements would be simplified.

Latest quarterly figures in the Bank of England note show 98% of PRA senior-manager applications were decided inside the proposed two-month statutory deadline, against 98.3% in the FCA’s most recent metrics. Speed of approval is already close to the new clock. The consultations are about who still has to ask.

A City Dinner and Unchanged Standards

The announcement was folded into Mansion House speeches by Katharine Braddick, the Bank’s deputy governor for prudential regulation and PRA chief executive, and Nikhil Rathi, the FCA’s chief executive, at the Corporation of the City of London’s annual City Dinner on 22 October 2026. Braddick took the PRA job on 1 July 2026 for a term to 30 June 2031, after four years as group head of strategic policy and senior adviser to the chief executive at Barclays.

The Senior Managers Regime is an essential part of the UK’s regulatory framework. These proposals keep checks in place for the most important roles, meaning individuals are accountable for their actions, but reduce the administrative burden where it isn’t needed, giving firms more time to invest in growth-focused activities and greater flexibility in onboarding senior talent.

Katharine Braddick, Deputy Governor for Prudential Regulation and PRA chief executive, Bank of England news release, 22 October 2026

Sarah Pritchard, the FCA’s deputy chief executive, said the regime had improved accountability and governance, and that the same impact could be had with a more streamlined rulebook. The joint line is that “high standards of individual accountability and conduct will remain unchanged,” including a pledge to hold people to account for misconduct that hits society as well as their employers.

Rathi’s dinner speech, “Market Integrity in a Digital Age,” dwelt on technology and the FCA’s use of its powers. The SM&CR rewrite rode in on the same night, in the same room, as a growth and competitiveness story.

Speaking at Mansion House, Nikhil Rathi set out how we need to adapt as technology transforms financial markets.

That means investing in data and technology, using our powers effectively and working in partnership to maintain trust and market integrity.https://t.co/lbcJkEhwNm… pic.twitter.com/aUSZdYStNE

— Financial Conduct Authority (@TheFCA) October 23, 2026

That pairing is the oddity in the package. The people who still need a regulator’s nod before they sit down, chief executives, finance chiefs and chairs, were in the building. The 139,000 names due to leave the public list were not the guests.

The Public Directory Would Go Dark

Removing certification is an HR and compliance cut inside firms. Retiring the Directory is a public cut. The FCA’s directory of certified and assessed persons sits on the Financial Services Register so consumers and professionals can check key people in the industry.

The published file is meant to show a person’s name and previous names, roles with start and end dates, and the activities they undertake. For customer-facing jobs that need a qualification, it also carries how they deal with clients, workplace location where relevant, and professional-body memberships. Directory people include certified staff, directors who are not senior managers, and some sole traders and appointed representatives who deal with clients in qualified roles.

Phase 2 would retire that Directory and end the reporting and attestation that feed it. A recruiter, a customer, or another firm that today looks someone up on the Register would, if the plan holds, lose that window on the mid-level population. Senior managers who still need approval would remain visible through the older approved-persons track. The mass of certified names would not.

Firms would still have to keep their own people competent, suitable and within conduct standards, the regulators say. That duty would live in handbooks and in senior-manager accountability, not in an annual certificate or a public row on the Register.

The Enforcement File Is Thin at the Top

The political memory behind the SM&CR is that almost no bank boss was personally nailed for the 2008 crash. The regime that followed, live for banks from 2016, insurers from 2018 and other FCA firms from December 2019, was the named-person answer. Ten years on, the enforcement file against the senior layer is still small next to the certified headcount now in the firing line.

THE FCA FILE ON SENIOR MANAGERS

• Open individual cases: 248 enforcement investigations into individuals were open on 31 August 2025.
• Senior managers: 21 of those open investigations related to Senior Managers, and 6 Senior Manager investigations had been opened since 1 January 2025.
• Closed in 2025: 4 Senior Manager investigations were closed, 2 with a financial penalty and a prohibition or partial prohibition, and 2 with no further action.
• Certified persons: 1 open investigation on 31 August 2025 related to a certified person.

Conduct-rule breach reports from firms, filed on the REP008 return for the much larger population of staff under the conduct rules, ran at 4,187 in 2024, against 2,043 in 2020. That is the pipe the Phase 2 papers want to narrow, by lifting the threshold so the regulator hears about more serious cases rather than the full flow of lower-level breaches.

Prem Sikka, the emeritus professor who has long argued for tougher personal accountability in finance, called the plan deregulation mania and wrote that the SM&CR was brought in after the crash and the interest-rate rigging scandals to hold named people to account for integrity. “Banks will behave, won’t they,” he added.

The louder problem in the file is not that CEOs are being waved through. They are not. It is that a decade of the regime produced a thin docket at the top, a fat volume of low-level breach reports in the middle, and a public Directory that Phase 2 would now switch off.

Leeds Reforms Still Need a Bill

None of the big cuts is a finished rule. The PRA says significant parts of Phase 2 depend on Parliament passing the Financial Services and Markets Bill in something close to its current form. The FCA’s paper says the Bill would strip many prescriptive SM&CR duties out of statute and leave the regulators to decide, in their rulebooks, how those duties should apply.

That is the Leeds Reforms track announced on 15 July 2025. The government asked then whether to take the Certification Regime out of the Financial Services and Markets Act 2000, cut the number of roles that need pre-approval, and give the regulators more room to be “proportionate.” Its response, updated on 22 April 2026, said it would remove the Certification Regime from legislation, including the annual recertification duty.

The same competitiveness drive already took the bankers’ bonus cap out of the rulebook from 31 October 2023. That cap had limited variable pay to 100% of fixed pay, or 200% with shareholder approval. SM&CR is the larger piece of post-crisis furniture now on the same workbench.

THE SM&CR CLOCK

1. March 2016: The Senior Managers and Certification Regime goes live for banks, building societies, credit unions and designated investment firms.
2. December 2018: Insurers are brought in.
3. December 2019: The regime extends to solo-regulated financial-services firms.
4. 31 October 2023: The PRA and FCA remove the bonus cap on variable pay.
5. 15 July 2025: The government launches the Leeds Reforms consultation on rewriting SM&CR in statute.
6. 24 April 2026: Phase 1 SM&CR cuts take effect, including a 30% rise in many enhanced-firm thresholds.
7. 22 October 2026: Phase 2 consultations open, with replies due by 22 January 2027.

The PRA says it would make the rule changes after the Bill receives Royal Assent and is commenced, but before those provisions bite, so the new handbook can land as soon as the law allows. Until that vote, the 139,000 certificates stay in force.

The Certificate Had Become a Formality

Treasury officials heard that line from the industry before the regulators put it in a consultation. The government’s April 2026 response drew on 58 replies. A large majority wanted the Certification Regime taken out of FSMA 2000, calling the statute too rigid and the annual recertification a drain on HR, compliance and line managers. Several respondents said the certificate itself had become a formality, adding little beyond what firms already held on file.

A small minority argued the opposite: that the statutory duty kept a culture of personal accountability below the board, and that dropping it could leave standards uneven, especially in smaller firms. In a 2023 discussion paper, 88% of respondents told the PRA the regime made it easier to hold individuals to account, while still asking for a lighter process.

That split is the whole offer. Firms get out of an annual ritual they already treat as paperwork. The PRA and FCA keep the senior-manager gate, keep a call-in power for risky appointments, and keep saying the standard has not moved. The public loses the Directory that made 139,000 of those names searchable. Crypto firms heading into the perimeter would arrive after the certification net had been pulled up.

Replies close on 22 January 2027. Final rules are pencilled for the first half of 2027, and only after the Bill is through. Until then the certificates still have to be signed, and the Register still carries the names.