Britain’s financial regulators have proposed removing formal certification requirements for about 139,000 people performing certification functions, a change the FCA estimates could reduce firms’ annual compliance costs by £229.9 million.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) opened consultations on the proposals Thursday, Oct. 22. The changes form the second phase of a review of the Senior Managers and Certification Regime (SM&CR), which began with banks in 2016 after the financial crisis and expanded to most regulated firms by 2021.
The FCA’s cost-benefit analysis projects that the proposals would lower firms’ annual SM&CR compliance costs by about 53%. It estimates a net present value of £1.91 billion over 10 years, after one-time transition costs of £61.7 million. These are projections, not savings already achieved. The FCA says the government, the FCA and the PRA share a goal of cutting the regime’s regulatory burden by 50% while retaining individual accountability.
The FCA counts about 261,000 certification functions among the work performed by the affected individuals. If the Certification Regime is removed, firms would still be responsible for checking that relevant employees are competent and suitable and meet conduct standards.
For most staff who are not senior managers and are covered only by Individual Conduct Rules, firms would report disciplinary cases only if they end in a final written warning or dismissal. They would have up to 14 months to report final outcomes. Separate reporting requirements would continue for senior managers and some other employees.
The proposals would also replace pre-approval with notification for some senior-management functions at dual-regulated and Enhanced firms. Firms would continue vetting candidates, and notified senior managers would remain subject to the Duty of Responsibility and Senior Manager Conduct Rules.
The FCA says the proposed reductions in oversight could leave regulators with less information and fewer preventive tools, raising risk. It points to firms’ continuing duties and the senior-manager accountability rules as safeguards.
Responses are due Jan. 22, 2027. The FCA expects to issue final requirements in the first half of 2027 and proposes implementation in the second half, subject to the parliamentary process for the Financial Services and Markets Bill 2026.
