Banks
UK regulators propose scrapping the Certification Regime for about 139,000 staff in the second phase of senior manager reforms
The PRA and FCA say the changes could save firms around £2 billion over 10 years, with consultations open until 22 January 2027 and some measures still needing legislation.
HedgeWeekly News Desk ·
Britain's Prudential Regulation Authority and Financial Conduct Authority opened parallel consultations on 22 October on the second phase of their review of the Senior Managers and Certification Regime, the framework introduced a decade ago to hold named individuals at regulated firms accountable for decisions. The headline proposal is to remove the Certification Regime, which the Bank of England said covers around 139,000 people below senior manager level, ending annual certification checks and their entries on the Financial Services Register.
Regulator pre-approval would also be dropped for a range of roles, including chief actuaries and chairs of risk and audit committees. Firms would notify the regulators instead and remain responsible for checking that candidates are fit and proper. Chief executives, finance chiefs and chairs would still need sign-off, and the regulators could insist on pre-approval for notified roles in high-risk cases. The FCA's paper, CP26/37, adds proposals to remove some senior management functions, raise the thresholds for the Enhanced regime, stop ongoing submissions of Statements of Responsibilities and Management Responsibilities Maps, retire the Directory of certified and assessed persons, and raise breach reporting thresholds under the Conduct Rules.
The regulators put the saving for firms at around £2 billion over 10 years. The PRA expects its pre-approvals to fall by 43% and the overall burden of its regime to be halved. For Enhanced firms regulated solely by the FCA, about 15% of applications would shift to notification and two senior management roles would go, a further 19% saving. The plans were set out in Mansion House speeches by PRA chief executive Katharine Braddick, who also unveiled a five-year PRA strategy, and FCA chief executive Nikhil Rathi.
For firms, the timetable matters as much as the content. Both consultations close on 22 January 2027, and the FCA expects to publish final rules in the first half of 2027. Some changes cannot take effect without legislation: HM Treasury said in April that it intends to remove the Certification Regime from primary legislation and to align commencement with the regulators' replacement rules to avoid gaps, and the FCA ties the new proposals to the Financial Services and Markets Bill. The FCA paper covers every firm already in the regime, including third-country branches, as well as firms due to join it such as cryptoasset businesses. This phase builds on April's first-round changes, which raised the Enhanced thresholds for larger firms by 30%.