Understanding the Phase 1 Reforms to the SM&CR

Module 1: Introduction to SM&CR and the Need for Reform

• What is the Senior Managers & Certification Regime (SM&CR)?
• Brief overview of its purpose: individual accountability, standards of behaviour and competence.
• Key components: Senior Management Functions (SMFs), Certification Regime, Conduct Rules.
• Why are Reforms Being Introduced?
  • Government's objective: drive growth in financial services.
  • Regulators' aim: make the regime more effective, efficient, and less onerous.
  • Maintaining consumer and market protection, and safety/soundness of firms.
  • Context: Edinburgh Reforms and previous discussion papers.

Module 2: Deep Dive into Phase 1 Proposed Changes

• Streamlining Senior Manager Applications
• Increased time and flexibility for submitting applications due to unexpected/temporary changes.
• Increased validity period for criminal record checks prior to application submission.
• Clarification on the definition of certain SMF roles.
• Reducing Certification Regime Burden
• Proposals to strip out duplication for individuals certified for separate functions (aiming for 15% reduction in roles).
• Guidance on streamlining annual 'fit and proper' checks.
• Extended time for firms to update the Directory of certified staff.
• Adjusting Reporting Requirements
• More time allowed for firms to report updates to senior manager responsibilities.

Module 3: Implications and Continued Accountability

• Operational Impact for Firms
• Changes to internal processes for onboarding SMFs and certified individuals.
• Adjustments to annual certification review processes.
• Updates to internal record-keeping and reporting.
• Maintaining High Standards and Accountability
• Reinforcement of the principle: "Integrity and accountability at the top matter."
• How the reforms support outcomes-based regulation without diluting accountability.
• Case studies or examples (if available) illustrating accountability.
• Q&A and Discussion
• Open forum for questions and discussion on specific scenarios or concerns.

Module 4: Future Outlook and Next Steps

• The Consultation Process
• Current consultation closing date: 7 October 2025.
• How to provide feedback (if applicable for participants).
• Phase 2 Reforms (Legislative Changes)
• Overview of potential future changes pending government legislation (e.g., proportionate replacement for Certification Regime, further reduction in pre-approval roles).
• FCA's call for views on accelerating Phase 2.
• Preparing Your Firm
• Reviewing current SM&CR policies and procedures.
• Identifying areas for adaptation based on proposed Phase 1 changes.
• Monitoring future announcements from the FCA and PRA.

Summary Discussion, Takeaways and Close

With over 20 years training experience in financial services, the trainer is well placed to support you across a range of compliance-related topics. He is a former Head of Education for HSBC covering the UK and Europe, responsible for regulatory and financial crime related compliance learning. His time at HSBC was during intense scrutiny from regulators and government functions during the bank’s vulnerable customers banking for Deferred Prosecution Agreement.

Other roles include leading the Monitoring and Testing programme for a UK Wealth Manager, and Senior Vice President responsible for Global Vulnerable Risk & Compliance training at a US-based bank. He also worked in the Insurance Firms division at the Financial Conduct Authority (in the FSA days) where he was the divisional expert for the rules and outcomes required under the Training & Competence handbook.

Since leaving HSBC, he has worked with the compliance, HR and operational teams of firms to enhance their regulatory understanding, as well as delivering content across private equity firms, investment houses, banks and wealth managers.

He is a former member of the Investment Management Association Training & Education Committee and won the Thomson Reuters award for “Most Effective Compliance Training at a Regulated Firm” in 2010.

Upon completion of this training, participants will be able to:

• Understand the key drivers and goals behind the FCA and PRA's Phase 1 reforms to the SM&CR.
• Identify the specific proposed changes impacting senior manager applications, certification roles, and reporting requirements.
• Recognise the implications of these changes for their firm's SM&CR processes.
• Appreciate the ongoing commitment to individual accountability within the streamlined regime.
• Prepare their firm for adapting to the new guidelines once they are finalised.

• Senior Managers and Certified Persons
• Compliance Professionals
• HR Professionals involved in SM&CR processes
• Legal Teams
• Anyone involved in the governance or oversight of SM&CR within financial services firms

The proposed Phase 1 reforms to the Senior Managers & Certification Regime (SM&CR) aim to make the regime more effective, efficient, and less burdensome, with the goal of driving growth in financial services. The proposed changes focus on three key areas: streamlining senior manager applications, reducing the Certification Regime's burden, and adjusting reporting requirements. The reforms are also intended to maintain consumer and market protection as well as individual accountability.  Firms should understand and be ready for the changes once implemented, to ensure optimal efficiency in their compliance activity and to better support business operations.