CP26/37 would retire certification and notify senior roles

Financial Conduct Authority consultation CP26/37 and Prudential Regulation Authority consultation CP14/26, published together on October 22, 2026, would retire the Certification Regime and move a defined list of Senior Management Functions from regulatory pre-approval to firm notification, while chief executives, chief finance officers, chief risk officers and chairs of the governing body stay on pre-approval.

The Financial Services and Markets Bill, introduced in May 2026, would lift much of the prescriptive Senior Managers and Certification Regime (SM&CR) out of the Financial Services and Markets Act 2000 (FSMA) and leave the design to regulator rules. The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) opened the consultations so that a policy statement can follow in 2027 if Parliament enacts the Bill substantially in its current form. The PRA calls the package the most significant reform of the regime since 2016. The joint announcement puts the saving at around £2 billion over 10 years.

Key facts from the Phase 2 consultations

• Published October 22, 2026; responses by January 22, 2027 (FCA page and PRA paragraph 8.5).
• Joint saving around £2 billion over 10 years; PRA central estimate £11.5 million a year, a 47% cut from £24.8 million (paragraphs 6.32 and 6.47).
• Around 1,200 PRA firms, 7,000 PRA senior managers and 7,700 PRA-certified staff, against around 59,000 FCA senior managers and 139,000 certified staff (paragraphs 6.18 and 6.19).
• PRA pre-approvals expected to fall about 43% (paragraph 6.33), against a 40% pre-approval and 50% burden commitment (paragraph 2.9).
• Temporary cover from 12 to 18 weeks, and about 1,700 fewer statement and map submissions a year (paragraphs 3.36 and 3.28).
• Latest quarter: 98% of PRA applications met the proposed 2-month deadline, against 98.3% on the FCA's latest quarterly metrics.
• FCA policy statement expected in the first half of 2027; PRA implementation in the second half, after Royal Assent and HM Treasury (HMT) commencement.

Methodology and sources

Primary documents are the FCA page for CP26/37, the PRA page for CP14/26, and the joint news release of October 22, 2026. Linked from those pages, and cited for their titles, are the CP26/37 PDF, PS26/6, DP23/3 and PS12/26. Figures in the account come from the three web pages. Ranges below are the PRA's central case unless a percentile band is stated.

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Coverage runs from October 22, 2026 to the January 22, 2027 response date, using application counts for March 1, 2025 to February 28, 2026, 2025 certificate volumes, and a survey fielded from April through July 2026. The scope is the United Kingdom: PRA deposit-takers and insurers, FCA solo-regulated firms, dual-regulated firms, third-country branches, and cryptoasset firms the FCA lists as due to enter the regime. The PRA records that 88% of respondents to joint discussion paper DP1/23 agreed the regime made it easier to hold individuals to account, and the FCA page links DP23/3 among the earlier review documents. Dates for final rules depend on the Bill.

What CP26/37 and CP14/26 actually propose

The Phase 2 review of the Senior Managers and Certification Regime is the paired proposal in Financial Conduct Authority consultation CP26/37 and Prudential Regulation Authority consultation CP14/26, both published on October 22, 2026. The papers would remove certification, meaning the annual fitness-and-propriety assessment, the certificate and the regulatory reference for people below senior manager level. The PRA puts its supervised certified population at around 7,700 individuals and the FCA population at around 59,000 senior management function holders and 139,000 certified individuals. The chief executive, chief finance, chief risk and chair functions would remain on pre-approval, while internal audit, the risk, audit and remuneration chairs, and the chief actuary would move to notification once the firm has assessed fitness and propriety. Notified senior managers would remain under the Duty of Responsibility and the Senior Manager Conduct Rules. Responses are due by January 22, 2027, with PRA implementation expected in the second half of 2027 once the Bill is enacted and commenced.

Table 1 applies that split to every firm. Senior Management Function (SMF) 24, the chief operating function, stays on pre-approval because of operational risk, including artificial intelligence and cyber incidents, with a review two years after implementation. SMF7 would split into pre-approved SMF7 and notified SMF7a. Group chief executive, finance, risk, operations, compliance, money-laundering reporting and board-chair roles that exercise significant influence would stay pre-approved. Other SMF7 appointments, often at overseas banks' UK branches and subsidiaries, would be notified on the substance of the role.

Source: Table 1 of PRA CP14/26, published on October 22, 2026.

Fitness and propriety would still be judged before every senior-manager appointment, and Prescribed Responsibility A would cover that vetting. Statements of responsibilities and maps would stay accurate inside the firm. An update recording the Phase 2 deletions would stay internal, Form J would be withdrawn, and paragraph 3.28 estimates about 1,700 fewer submissions a year. A firm with a single senior manager would be outside that maintenance duty. Prescribed responsibilities for certification, allocation, training and induction, the map and the business model would be removed. Temporary cover would run to 18 weeks, up from 12, and Form D would cease for an absence beyond 12 weeks.

How PRA banking, insurance and FCA rules diverge

PRA consultation CP14/26 and FCA consultation CP26/37 share a direction and differ in scale. CP14/26 applies to around 1,200 PRA-authorised firms, including around 675 deposit-takers and 560 insurers, and to around 7,000 senior management function holders. In the latest quarter, 98% of PRA senior-manager applications were decided inside the proposed 2-month statutory deadline, on 1,250 decisions across March 1, 2025 to February 28, 2026. The joint announcement says PRA pre-approvals would fall by 43% and that, for FCA Enhanced solo-regulated firms, around 15% of applications would move to notification, two senior management functions would be removed, and a further 19% of burden would fall away. The PRA's central estimate cuts annual compliance cost from £24.8 million to £13.3 million, a 47% reduction. CP26/37 would retire the Directory of certified and assessed persons, while the Financial Services Register would still list senior managers as notified or pre-approved.

Sources: PRA CP14/26, FCA CP26/37 and the Bank of England news release of October 22, 2026, read on October 25, 2026.

The £2 billion and the PRA table answer different questions. Quantified PRA-firm savings have a 10-year present value of £41.3 million to £201.4 million, central £101.5 million, and familiarisation is £4.3 million once. Notification, slimmer filings and the end of certification save central amounts of £313,000, £1.3 million and £6.0 million a year. Paragraph 6.19 sends the solo-regulated book to the FCA cost-benefit analysis.

“The Senior Managers Regime is an essential part of the UK’s regulatory framework. These proposals keep checks in place for the most important roles, meaning individuals are accountable for their actions, but reduce the administrative burden where it isn’t needed, giving firms more time to invest in growth-focused activities and greater flexibility in onboarding senior talent.”

— Katharine Braddick, deputy governor for prudential regulation and chief executive officer of the PRA (Bank of England)

What individual accountability still requires

Paragraph 3.6 holds notified senior managers to the Duty of Responsibility, the reasonable-steps standard and the Senior Manager Conduct Rules. For key function holders, material risk takers and certain senior credit-union roles, the three Individual Conduct Rules would continue, and the reportable warning would rise from a formal written warning to a final written warning after any appeal. Suspension, dismissal, and reduction or recovery of remuneration would still be filed on Form L within 7 business days. Fundamental Rule 7 would still require notice of matters the PRA would reasonably expect to hear.

Section 55M of FSMA lets the PRA require pre-approval of a notified role in an exceptional case: a firm at risk of failing, serious concerns about governance or fitness checks, or a role that particularly matters to safety and soundness. Paragraphs 6.42 and 6.43 say a fitness problem may surface later, after pre-approval scrutiny and the certification check are removed. Mitigants are the Conduct Rules, the extended competent-employee rule on integrity and honesty, and the section 55M power. The Odey Upper Tribunal decision shows an integrity finding turning on removal of an executive committee. Wider conduct-rule training sits in section 64B, which the Bill is expected to lift from statute.

What the package means for banks, insurers and solo-regulated firms

A PRA-authorised bank would run two tracks. SMF1, SMF2, SMF4, SMF9 and SMF24 would still need approval before the role is performed and, under new paragraph 2.4D of SS28/15 and SS35/15, before a public announcement, unless disclosure or a time-sensitive change in control requires the words "subject to regulatory approval". A notification would name the person, confirm the fitness checks, and attach the statement and map where they still apply. Form M, around 200 filings a year, and Form F, around 10, would be removed. Insurers would notify actuarial functions and keep the chief underwriting officer on pre-approval.

The PRA cost figures rest on 96 dual-regulated responses from a 2026 survey, a sample that over-represents banks and building societies, so £11.5 million is a weak guide to any one firm. April 2026 statements PS26/6 and PS12/26 already raised enhanced thresholds by 30% and removed duplicate certification where functions overlap. The news release's further 19% Enhanced saving, and the two functions it would remove, are given as totals rather than names.

Cryptoasset firms are named as due to enter the regime, and PS26/13 confirms a modification-by-consent approach to certification for firms entering the gateway, which matters to applicants already on the FCA cryptoasset gateway. Solo-regulated brokers and investment firms sit in the FCA count of around 59,000 function holders. Client-money segregation under CASS 7 stays a separate duty for contracts-for-difference brokers. SMF24 stays on pre-approval because of operational risk from artificial intelligence and cyber incidents, a point also taken up in reporting on EU, UK and Singapore rules on frontier-AI technology risk. Compliance teams would still track who is pre-approved, who is notified and who used to be certified.

“SM&CR has delivered significant improvements in accountability and governance across financial services. We remain committed to ensuring individual accountability and good standards of behaviour across financial services. But we can achieve the same impact with a more streamlined regime, supporting our aim to be a smarter regulator.”

— Sarah Pritchard, deputy CEO, in the joint PRA and FCA announcement (Bank of England)

What is still open after responses close

Both consultations close on January 22, 2027. The FCA expects a policy statement in the first half of 2027, and the PRA, at CP14_26@bankofengland.co.uk, expects rules in the second half, after Royal Assent and HMT commencement. Paragraph 2.9 tests success as a 50% burden cut and a 40% cut in pre-approvals. Paragraph 6.52 says unpriced gains would carry the package to both tests, against a priced central cut of 47%. Any rename, and the forms direction, come later. SMF24 will be reviewed two years after implementation.

Paragraph 6.36 says the reforms move the UK closer to similar regimes elsewhere, in principle. The comparison worked through here is PRA banking, PRA insurance and the FCA solo-regulated book. The news release sets the consultations beside Mansion House measures from Katharine Braddick and Nikhil Rathi: more flexible sharing of ring-fenced resources, the PRA consultation on indexing thresholds to nominal GDP, FCA capital-markets work, and support for firms that want to start and scale. The appointment rules that would change are still the drafts in CP14/26 and CP26/37.

TL;DR

The FCA and the PRA opened CP26/37 and CP14/26 on October 22, 2026. Certification would end, a listed set of senior management functions would move from pre-approval to notification, and chief executives, chief finance officers, chief risk officers and chairs would stay on pre-approval. The joint announcement expects savings of around £2 billion over 10 years. The PRA's central estimate for its own firms is a fall in annual quantified compliance cost from £24.8 million to £13.3 million, a 47% cut, based on 96 survey responses. Notified senior managers would still face the Duty of Responsibility. Responses close on January 22, 2027. PRA implementation is expected in the second half of 2027 if the Financial Services and Markets Bill is in force, and the FCA expects its policy statement in the first half of that year.

FAQ

What would CP26/37 change about annual certification for staff below senior manager level?

CP26/37 and CP14/26 would remove certification rather than replace it. Firms would end the yearly fitness assessment, the certificate and the regulatory reference for around 7,700 PRA-certified people and 139,000 FCA-certified people. CRR firms and Solvency II insurers would still consider integrity and honesty under an extended competent-employee rule. The PRA places this in the second half of 2027, after the Bill is enacted and commenced, and until then today's duties continue, including the PS26/13 modification by consent for cryptoasset entrants.

Which senior management functions would stay on PRA pre-approval under CP14/26?

Table 1 keeps pre-approval for SMF1, SMF2, SMF4, SMF7, SMF9, SMF19, SMF23, SMF23a, SMF24 and SMF25, which covers chief executives, finance and risk heads, chairs, branch heads, underwriting chiefs and chief operating officers. Internal audit, committee chairs, actuarial functions and the other rows move to notification, including SMF7a. Firms would still assess fitness and propriety before a notified start. Section 55M of FSMA can restore pre-approval in an exceptional case, and the joint release also keeps a regulatory fit-and-proper test for chief executives, chief finance officers and chairs.

When do the Phase 2 consultations close, and when might final rules take effect?

The FCA page and PRA paragraph 8.5 close both consultations on January 22, 2027. The FCA expects a policy statement in the first half of 2027, and the PRA expects rules in the second half, after Royal Assent and HMT commencement, written before the statutory provisions take effect. Question 1 asks firms what gap they want after the policy statement, and the Practitioner Panel has argued for a short, single switch. The second-half date still depends on the Bill and on the responses.

How would conduct-rule breach reporting change for staff below senior manager level?

Senior-manager conduct reporting, including during temporary cover, would stay as it is. For key function holders, material risk takers and certain senior credit-union roles, the three Individual Conduct Rules would continue. CP14/26 would copy the section 64C definition into the glossary as disciplinary or remuneration action and would lift the reportable warning from a formal written warning to a final one after any appeal. Suspension, dismissal and remuneration cuts or recoveries would still go on Form L within 7 business days, and Fundamental Rule 7 would still require notice of matters the PRA would reasonably expect to hear.

What happens to statements of responsibilities and to management responsibilities maps?

Firms would keep statements of responsibilities and applicable maps accurate and produce them on request. Routine filing after each significant change would end and Form J would go, a cut paragraph 3.28 puts at about 1,700 submissions a year. Application and notification papers would still show the responsibilities that will apply once the appointment takes effect. A single-senior-manager firm would be outside the maintenance duty, apart from temporary cover, and Phase 2 deletions would be updated internally. That shift from Phase 1's six-month filing rhythm is a large part of the £1.3 million central saving.

How should a reader compare the £2 billion figure with the PRA's £11.5 million?

The news release attaches around £2 billion over 10 years to the PRA and FCA consultations together. CP14/26's central estimate is an £11.5 million annual cut for PRA firms, from £24.8 million to £13.3 million, with a 10-year present value of £101.5 million, inside £41.3 million to £201.4 million. Faster hiring is an extra benefit the survey leaves largely unpriced. Paragraph 6.19 points the solo-regulated population, around 59,000 function holders and 139,000 certified individuals, to the FCA cost-benefit analysis, which is a separate sum from the PRA present value.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.