FCA Revisions to the SMCR Regime: Considerations for Private Fund Managers

The UK Financial Conduct Authority (FCA) has published Policy Statement (PS 26/6). It sets out the final reforms to the Senior Managers & Certification Regime (SMCR) and follows the FCA’s 2025 consultation “CP25/21: Senior Managers & Certification Regime Review.” It complements the changes made to address non-financial misconduct in “PS25/23: Tackling non-financial misconduct in financial services,” which we covered in our December 2025 alert.  

The SMCR sets out the requirements for any individual, such as a director or partner, who performs senior manager functions (SMF) within a firm and any individual, such as an investment professional, who performs a certification function. This includes rules on eligibility, applications to the FCA, and standards of conduct. 

Noting that PS 26/6’s main aim is to simplify the operation of the SMCR and reduce the administrative function for FCA-authorised firms, including private fund managers, the changes to FCA rules and guidance include changes to the requirements on criminal record checks, the “12-week rule,” statements of responsibility, the certification regime, the directory of certified and assessed persons, regulatory references, conduct rules, and prescribed responsibilities. We discuss these below. 

Most changes take effect on 24 April 2026. The changes to regulatory reporting and processes will apply from 10 July 2026.

Comment: PS26/6 represents a measured recalibration of the SMCR. It seeks to prioritise efficiency and proportionality without altering the SMCR’s foundational accountability principles: FCA-authorised private fund managers (firms). The reforms in PS26/6 offer incremental operational relief but do not reduce the substantive regulatory or personal liability risks associated with senior management roles. Major changes are likely to emerge in the next legislative phase, making early engagement and forward thinking important.

1. What Is the FCA Seeking to Achieve Through the Reforms?

CP 26/6 introduces reforms aimed at simplifying SMCR operations, cutting down on repetitive tasks and bureaucracy, and advancing the UK's goals for competitiveness, at the same time maintaining the regime’s core objective of individual accountability and high conduct standards.

The policy direction aligns with HMT’s broader reform program, which emphasises proportionality, i.e. regulatory requirements that are no more onerous than those necessary for protecting investors, and efficiency but does not undermine market integrity.

Comment: The FCA has deliberately avoided fundamental structural change at this stage (e.g., removal of certification from legislation), instead implementing incremental, operational reforms within existing statutory constraints. This reflects a cautious approach, pending potential legislative change in phase two.

2. What Are the Key Changes?

To reduce unnecessary burden for FCA-authorised firms, changes include the following:

• Criminal records checks (CRCs): The FCA has extended the validity period for CRCs for SMF candidates from three to six months. Firms will also no longer have to obtain a CRC where an existing SMF holder is applying for another SMF role within the firm or a member of its group. Although these changes take effect on 24 April, the FCA has indicated that it will not be updating the relevant forms until 10 July 2026. Firms should therefore expect a temporary mismatch between form wording and the revised requirements.
• The 12-week rule: The FCA has adjusted the 12-week rule, which permits an individual to perform an SMF role for up to 12 weeks without FCA approval. Firms now have 12 weeks to submit an SMF application rather than to both submit and obtain approval. The individual can continue to perform the role pending determination, with the FCA’s Senior Manager Conduct Rules applying during that interim period.
• Statements of responsibilities and management responsibilities maps: Firms will now have up to six months to notify the FCA of changes to these. Where multiple changes occur within that period, firms will be required to submit only the most recent version.
• Certification regime: Additional guidance clarifies the FCA’s expectations when assessing individuals as “fit and proper.” Firms may deliver certification electronically and will be able to align certification with existing HR review processes, applying the assessment on a proportionate basis where there has been no material change since the previous cycle.
• Directory of certified and assessed persons: The FCA has extended the deadline for updating most directory information from seven to 20 business days.
• Regulatory references: Firms will now have six weeks to respond to regulatory reference requests, up from four weeks.
• Conduct Rules: The FCA has provided clarificatory guidance on notification obligations, regulatory references where a FCA Conduct Rule breach has occurred, but the firm has not taken disciplinary action. Conduct Rule breaches by individuals who are not (yet) FCA-approved SMFs but are performing an SMF function will have to be reported as soon as reasonably practicable and not on an annual aggregated basis. Certain elements of the revised notification framework and Conduct Rules will come into force separately on 1 September 2026 as part of the wider non-financial misconduct changes.
• Prescribed Responsibilities (PRs): The FCA has added guidance on the allocation of PRs, including when it may be appropriate to split responsibilities and the categories of SMF holder to whom FCA-prescribed responsibilities should be assigned.
• Thresholds for becoming an “enhanced” SMCR firm: There is greater flexibility in timing for submitting approval applications in unforeseen or temporary appointments.

Comment: These changes are procedural rather than substantive and do not materially dilute the underlying accountability framework. However, they redistribute compliance efforts from formal processes to internal governance judgment, particularly on certification.

3. How Do the Reforms Affect the Certification Regime?

PS26/6 does not remove or fundamentally redesign the Certification Regime, which remains embedded in legislation. However, it does the following:

• Reduces duplication of certification roles
• Clarifies expectations regarding annual fit-and-proper assessments

Comment: HMT is still reviewing the major reform, which could involve eliminating the Certification Regime from statutory law. Therefore, it is not included in PS26/6.

4. What Are the Implications for Firms?

While firms are generally “solo-regulated firms” subject to SMCR, the practical impacts include the points below.

(a) Senior Management Appointments and Succession Planning

Increased flexibility in approval timing may reduce friction in hiring portfolio managers or senior executives, particularly in time-sensitive transactions. However, firms must still ensure robust internal due diligence prior to appointment, because regulatory scrutiny of accountability remains unchanged.

(b) Certification Population and Scope

Rationalisation of certification roles may reduce the population of certified staff, particularly where individuals currently hold overlapping functions. For firms with lean teams, this may result in simplified HR and compliance processes, although a mapping exercise will need to be considered.

(c) Annual Fit-and-Proper Assessments

FCA guidance is expected to support more risk-based and proportionate assessments, which may benefit firms with the following:

• complex delegation models
• geographically dispersed investment teams

(d) Governance Documentation

Extended timelines for updating statements of responsibilities and internal records may ease operational pressure, particularly during the following:

• Restructurings
• Fund launches
• Acquisitions of management entities

Comment: As noted above, for firms, the reforms are incrementally positive, particularly in reducing administrative friction. However, they do not materially change the personal accountability exposure of SMF holders, e.g., the SMF 27 partner and SMF 16 compliance SMF holders.

5. Does PS26/6 Change FCA Enforcement Risk or Individual Accountability?

No. The FCA has been explicit that reforms are intended to “maintain high standards” while improving efficiency.

The core elements remain unchanged:

• SMF holders remain subject to regulatory preapproval and statements of responsibilities.
• The Duty of Responsibility continues to apply.
• Conduct Rules remain in force across staff. 

Comment: The reforms should be viewed as process optimisation rather than deregulatory relaxation. Indeed, increased flexibility may heighten expectations that firms exercise sound judgment internally, potentially shifting supervisory focus toward outcomes rather than process compliance.

6. What Are the Next Steps in the SMCR Reform Program?

As noted above, PS26/6 represents the first phase of a broader reform agenda. Future developments are expected to include the following:

• Potential legislative reform by HMT
• Removal or redesign of the Certification Regime
• Reduction in the number of preapproval roles
• Introduction of more flexible, risk-based frameworks
• Further FCA/PRA rulemaking, contingent on legislative changes

Comment: PS26/6 suggests a shift toward a more principles-based, regulator-defined accountability regime with the FCA using its supervisory powers to set standards rather than being bound by fixed legislative standards. This will be subject always to the requirement for the FCA to follow general law principles of good administration, such as the duty to act reasonably and in a manner that is procedurally fair. It is difficult at this stage to comment precisely on how firms’ governance models will require material change, let alone any change at all.

7. What Actions Should Firms Be Taking?

The response to PS26/6 will depend on the nature, scale, and complexity of a manager’s business, but steps include the following: 

• Reviewing SMCR mapping exercises
• Identifying opportunities to rationalise certification roles
• Updating internal policies and procedures
• Reflecting revised timelines and FCA guidance
• Reassessing governance frameworks
• Ensuring clear allocation of responsibilities remains demonstrable
• Monitoring HMT developments and considering plans for phase two changes

Comment: Firms that treat PS26/6 as merely administrative may miss the broader signal: Regulatory expectations are shifting toward firm-led accountability frameworks, with less prescriptive process but potentially greater scrutiny of outcomes.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.