SM&CR Explained: The Senior Managers and Certification Regime for UK Financial Services

If you work in or advise a UK financial services firm, you have almost certainly come across the Senior Managers and Certification Regime, usually shortened to SM&CR. It is the framework the Financial Conduct Authority and Prudential Regulation Authority use to make individuals, not just firms, personally accountable for their conduct and competence. Understanding it properly matters for anyone working towards CPD requirements in a regulated firm, whether you sit on the board or simply handle client money day to day.

What is the Senior Managers and Certification Regime?

SM&CR was introduced in 2016 for banks, building societies and credit unions, in direct response to the 2008 financial crisis and the widespread view that no individual could be held properly accountable when things went wrong. The regime has since been extended in stages: insurers were brought in from December 2018, and by December 2019 every solo-regulated FCA firm, from small advisory practices to large asset managers, fell within scope. Benchmark administrators joined in December 2020, making SM&CR close to universal across UK financial services.

The three parts of SM&CR

The regime is built from three interlocking components, and it's worth understanding each on its own terms rather than treating SM&CR as a single monolithic rule.

The Senior Managers Regime requires anyone performing a Senior Management Function (an "SMF") to be pre-approved by the FCA or PRA before they start the role. Each senior manager must hold a Statement of Responsibilities setting out exactly what they are accountable for, and firms with more complex structures maintain a Management Responsibilities Map showing how those responsibilities fit together. Senior managers are also subject to a Duty of Responsibility: if something goes wrong in their area, they need to show they took reasonable steps to prevent it.

The Certification Regime covers staff who aren't senior managers but whose role could still cause significant harm to the firm or its customers — think client-facing advisers, algorithmic traders, or those managing material risk. Firms don't need FCA pre-approval for these roles, but they must assess and certify, at least annually, that each person is fit and proper to do the job.

The Conduct Rules set minimum standards of individual behaviour. Tier 1, the Individual Conduct Rules, apply to virtually all staff at a firm (acting with integrity, due skill and care, and being open with regulators). Tier 2, the additional Senior Manager Conduct Rules, apply only to those holding an SMF, and include a specific duty to delegate appropriately and oversee delegated tasks effectively.

Who does SM&CR apply to, and how much depends on firm size

Not every firm faces the same level of obligation. The FCA sorts solo-regulated firms into "Limited Scope", "Core" and "Enhanced" categories, with Enhanced firms — generally the largest and most complex — facing the fullest set of requirements, including a Management Responsibilities Map and additional Senior Management Functions. Smaller advisory and accountancy-linked firms often sit in the Core category, which still carries meaningful obligations but without some of the largest firms' documentation burden.

What's changing under PS26/6

In 2026 the FCA published Policy Statement PS26/6, a targeted review aimed at making SM&CR more proportionate without weakening individual accountability. Most of the changes took effect on 24 April 2026, including a simplified criminal records and disclosure process, a revised 12-week rule for handling temporary cover of senior roles, and lighter documentation requirements for Statements of Responsibilities and Management Responsibilities Maps. Reduced requirements also apply to certain Senior Management Functions, including SMF7 (Group Entity Senior Manager) and SMF18 (Other Overall Responsibility). Further changes are staggered through the rest of the year: improvements to regulatory reporting take effect on 10 July 2026, updates removing duplicate certification functions from the Financial Services Register's Directory follow on 30 July 2026, and changes aligning SM&CR with the FCA's wider misconduct framework under PS25/23 come into force on 1 September 2026. Firms already operating under SM&CR should treat 2026 as a year of incremental compliance updates rather than a single big-bang change.

Why SM&CR matters for compliance CPD

SM&CR sits alongside other accountability-focused obligations that regulated professionals need to keep current on, from the FCA's Consumer Duty through to the responsibilities carried by an MLRO in an accountancy or advisory firm. Because the Certification Regime requires an annual fitness-and-propriety assessment, firms typically build SM&CR awareness training into their yearly compliance CPD cycle rather than treating it as a one-off induction topic. Getting the detail right protects both the individual (whose regulatory record and career depend on it) and the firm (which can face enforcement action for weak SM&CR governance even where no individual is ultimately found at fault).

Frequently asked questions

Does SM&CR apply to accountancy firms? SM&CR itself applies to FCA and PRA-authorised firms, so most accountancy practices fall outside its direct scope unless they hold separate FCA authorisation, for example for investment business or consumer credit activity. However, many accountancy firms encounter SM&CR concepts indirectly when advising financial services clients.

What happens if a senior manager breaches a Conduct Rule? The firm must notify the FCA, and the individual can face regulatory sanctions ranging from a public censure to a prohibition from working in regulated financial services.

How often must certified staff be reassessed? At least once every 12 months, though firms can reassess more frequently if a specific concern arises.

Is SM&CR being scrapped? No. PS26/6 simplifies specific processes but leaves the core three-part structure — Senior Managers Regime, Certification Regime and Conduct Rules — fully in place.