PS12/26 – Review of the Senior Managers and Certification Regime (SM&CR) − Phase 1

1: Overview

1.1 The Senior Managers and Certification Regime (SM&CR) underpins sound risk management by ensuring that the most senior decision-makers in financial services firms are accountable for their actions. The SM&CR has been in place since 2016 as a response to the serious problems that emerged during the financial crisis. It ensures that appropriate senior decision-makers are identified and that these individuals are clear as to their responsibilities and accountability. The regime is widely regarded as having improved the safety and soundness of financial services firms and the wider financial system, advancing the PRA's primary objectives.

1.2 A joint Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) discussion paper (DP) 1/23 - Review of the Senior Managers and Certification Regime and a HM Treasury (HMT) call for evidence in March 2023 sought views on the ongoing operation of the regime. Responses to those publications and further industry engagement identified widespread appetite to streamline the regime, but without undermining its benefits.

1.3 In July 2025, the PRA published consultation paper (CP) 18/25 - Review of the Senior Managers and Certification Regime (SM&CR) proposing limited changes, that were not dependent on legislative changes, as part of a first phase (Phase 1) of SM&CR reform. At the same time, the FCA proposed related changes in CP25/21 - Senior Managers and Certification Regime review. HMT also consulted on legislative changes to the Financial Services and Markets Act 2000 (FSMA), that would enable a more extensive second phase (Phase 2) of reform. All three consultations closed on 7 October 2025.

1.4 This policy statement (PS) sets out the PRA's Phase 1 reforms to the regime in the light of stakeholder responses to CP18/25. In parallel, the FCA has published its policy statement on Phase 1 of the SM&CR. These reforms help ensure the SM&CR delivers its goals in an effective and proportionate manner, helping to support a dynamic, stable and competitive financial services sector. The PRA will issue a further consultation on more far-reaching Phase 2 reforms in the light of HMT's concurrent consultation response and HMT will put forward a draft Bill to enact the legislative changes to enable those further reforms.

1.5 In CP18/25, the PRA proposed to:

• make changes to increase flexibility for firms in making senior appointments, centring on changes to the '12-week rule', which allows firms to cover temporary or unforeseen Senior Management function (SMF) vacancies;
• provide additional clarity about who is within scope of the Senior Managers Regime, including the Group Entity Senior Manager function (SMF7) and proposing to exclude appointments in relation to the resolution or stabilisation of a deposit-taker;
• make changes to streamline some aspects of the application and ongoing operation of different components of the SM&CR such as statements of responsibilities, regulatory references and criminal record checks (CRCs); and
• enhance firms' ability to navigate the SM&CR through measures such as publication of a SM&CR policy index, various updates to its internet site and removal of certain EU policy material.

1.6 This PS contains the PRA's final policy, as follows:

• amendments to the following PRA Rulebook Parts (Appendix 1):
  • Glossary;
  • Allocation of Responsibilities;
  • Certification
  • Change in Control;
  • Conduct Rules;
  • Fitness and Propriety;
  • Notifications;
  • Insurance - Conduct Standards;
  • Insurance - Fitness and Propriety;
  • Insurance - Senior Management Functions;
  • Large Non-Solvency II Firms - Conduct Standards;
  • Large Non-Solvency II Firms - Fitness and Propriety;
  • Large Non-Solvency II Firms - Senior Management Functions;
  • Non-Solvency II Firms - Conduct Standards;
  • Non-Solvency II Firms - Fitness and Propriety;
  • Non-Solvency II Firms - Senior Management Functions; and
  • Senior Management Functions,
• amendments to SM&CR Form L Notifications of breach of conduct rules and related disciplinary action in relation to a person performing a certification function or a Conduct Rules non-executive director (Appendix 2);
• updated supervisory statement (SS) 28/15 - Strengthening individual accountability in banking (Appendix 3);
• updated SS35/15 - Strengthening individual accountability in insurance (Appendix 4); and
• updated SS5/21 - International banks: the PRA's approach to branch and subsidiary supervision (Appendix 5).

1.7 This PS is relevant to all PRA-authorised firms and all persons to which the Change in Control Part and FSMA applies. It is also relevant to firms seeking to apply for PRA authorisation as it identifies circumstances in which controllers, and their representative(s), may also need to be approved as a senior management function holder.

1.8 In determining its policy, the PRA considers representations received to consultation, publishing an account of them and the PRA's response ('feedback'). Details of any significant changes are also published. In this PS, the 'Summary of responses' section contains a general account of the representationsmade to the CP and the 'Feedback to responses' chapter contains the PRA's feedback.

1.9 In carrying out its policymaking functions, the PRA is required to have regard to various matters. In CP18/25, the PRA explained how it had regard to the most relevant of these matters in relation to the proposed policy. The 'Changes to draft policy' section of this chapter refers to that explanation, considering consultation responses where relevant.

Summary of responses

1.10 The PRA received 33 responses to CP18/25 some of which were jointly addressed to the FCA and/or HMT. The names of respondents to the CP who consented to their names being published are set out at Appendix 6. As well as those who consented, the PRA also received one response from a respondent who did not consent to their name being published.

1.11 Overall, respondents were strongly supportive of the PRA's objectives in reforming the SM&CR and welcomed most of the proposed changes. While some respondents commented that the Phase 1 proposals were relatively limited in scope or grant limited compliance cost reductions, many considered that the proposals would increase efficiency and reduce administrative burden, addressing many concerns raised in DP1/23.

1.12 In terms of specific proposals, the main points raised by respondents were in relation to the 12-week rule, where there were calls to relax the policy further. There were also comments on the Group Entity SMF7 proposals, which some respondents interpreted as expanding the scope of the function.

1.13 Many comments anticipated Phase 2 of the reforms. These covered a wide range of feedback and suggestions including process, systems, efficiency, forms and notifications. Some respondents said that the approach of two phases of SM&CR reforms would need to be managed carefully to avoid creating operational issues for firms. One of those respondents raised the risk of 'regrettable spending' in Phase 1 if any changes needed to be unwound in Phase 2. Others suggested firms should have the flexibility to retain existing arrangements during the transition between the two phases. A number of respondents additionally raised differences between the PRA and FCA's proposals and existing regimes. The PRA is grateful for the contributions received and will take those into account in the next stage of its work.

1.14 The PRA recognises that the scope of Phase 1 reforms is targeted in specific areas, largely reflecting constraints imposed by FSMA, with legislative change required to effect further reforms. However, the PRA considers that the proposals strike a balance between providing short term benefit and clarity while avoiding potentially unnecessary expense ('regret spend') for firms that could result from two rounds of more complex changes in Phases 1 and 2.

1.15 The PRA does not consider that the Phase 1 reforms will be burdensome for dual-regulated firms to implement. In some cases, it will be possible for firms to choose to retain existing processes. For example, to continue with the three-month CRC and to submit Statement of Responsibilities (SoR) updates on a live basis as and when they occur.

Changes to draft policy

1.16 Where the final rules differ from the draft in the CP in a way which is, in the opinion of the PRA, significant, FSMA^{footnote [1]} requires the PRA to publish:

• details of the differences together with an updated cost benefit analysis; and
• a statement setting out in the PRA's opinion on whether the impact of the final rules on mutuals is significantly different from:
  • the impact that the draft rule would have had on mutuals; or
  • the impact that the final rule will have on other PRA-authorised firms.

1.17 The PRA has also made additional consequential changes to its rules in its final policy to operationalise two of the proposals in CP18/25:

• The Notifications Part of the PRA Rulebook has been amended to require any breaches of the Senior Manager and Individual Conduct Rules by individuals operating under the 12-week rule to be submitted to the PRA using the Form L notification form, where any such breaches occur. There are also consequential amendments to Form L. The PRA does not consider this enabling measure to be a significant change.
• The CRR Firms Fitness and Propriety, Insurance - Fitness and Propriety, Large Non-Solvency II Firms Fitness and Propriety, and Non-Solvency II Firms Fitness and Propriety Parts of the PRA Rulebook have been amended so that firms are no longer required to undertake CRCs where an existing SMF holder is applying for an SMF role in the same group, and allowing for a one-month gap between roles. Previously this exemption only applied to roles in the same firm. Again, the PRA does not consider this enabling measure to be a significant change.

1.18 The PRA has made additional changes to its supervisory statements following responses to its consultation and one correction that it has self-identified:

• a further example of where use of the 12-week rule is appropriate has been added to SS28/15 and SS35/15 to improve clarity;
• the tables of examples that indicate where SMF7 designation may be more or less likely have been amended to clarify wording that led some respondents to conclude that the changes were more significant than intended;
• clarification has been provided in SS28/15 and SS35/15 that only the latest version of SoRs and Management Responsibility Maps (MRMs) need be submitted within the new six-month submission window;
• a cross-reference to the relevant rule(s) has been added in a new footnote to the guidance on criminal background checks in paragraph 4.19 of SS28/15 and paragraph 4.12 of SS35/15; and
• text deleted in error in paragraph 5.19 of SS35/15 will be reintroduced.

The PRA has also taken the opportunity to update certain links and cross-references and make other non-material amendments to improve the consistency of wording between SS28/15 and SS35/15.

1.19 The PRA does not expect the changes to its proposals to have a material impact on firms. They are intended to add clarity and, in the case of the additional rule changes, to enable policies consulted upon in CP18/25. The PRA does not consider that the impact is different for mutuals.

Accountability framework

1.20 When making rules, the PRA is required to comply with several legal obligations. In CP18/25, the PRA published its explanation of why the rules proposed by the CP were compatible with its objectives and with its duty to have regard to the regulatory principles.^{footnote [2]}

1.21 The PRA does not consider that the responses to CP18/25 materially change its analysis of how these proposals advance its statutory objectives. The PRA also considers that its duty to have regard to the regulatory principles is not materially altered by the feedback received.

Implementation and next steps

1.22 In CP18/25, the PRA proposed that the Phase 1 changes would likely be implemented in mid-2026.

1.23 The PRA confirms that amendments to the rules and supervisory statements will take effect on 24 April 2026.

1.24 Firms should note that system changes to amend long and short Form A (application to perform an SMF) and Form E (internal transfer of an SMF) will not be implemented until 10 July.^{footnote [3]} This means that the new validity period for CRCs will not be recognised in systems until then (see paragraph 2.86 below).

1.25 Changes to Form L, which is only available via the PRA's external website, will be implemented on 24 April 2026 when the rule change becomes effective.^{footnote [4]} This will permit the reporting of breaches of Senior Manager and Individual Conduct Rules by individuals operating under the 12-week rule (see paragraphs 2.11 to 2.12 below).

1.26 References related to the UK's membership of the EU in the supervisory statements covered by the policy in this PS have been updated as part of this PS to reflect the UK's withdrawal from the EU. Unless otherwise stated, any remaining references to EU or assimilated legislation refer to the version of that legislation which forms part of assimilated law.^{footnote [5]}

1.27 Subject to legislative timings, the PRA plans to consult on its proposals for more extensive Phase 2 reforms to take advantage of the additional flexibility arising from HMT's proposals. This includes considering how to reduce the number of Senior Manager roles subject to regulator pre-approval prior to appointment, reviewing Statements of Responsibility requirements, and a more proportionate, flexible and risk-sensitive approach following the removal of the Certification Regime from FSMA.

2: Feedback to responses

2.1 The PRA has considered the representations received in response to the CP. This chapter sets out the PRA's feedback to those responses, and its final decisions.

2.2 The sections below have been structured similarly to CP18/25. The responses have been grouped as follows:

• Senior Manager approval process;
• individuals in scope of the Senior Managers Regime;
• the application and ongoing operation of the SM&CR; and
• navigating the SM&CR.

Senior Manager approval process

12-week rule

2.3 The 12-week rule currently allows individuals to perform SMF roles on an interim basis without regulatory approval for up to 12 weeks within any consecutive 12-month period, only if their firm has an SMF vacancy that is temporary or reasonably unforeseen.

2.4 In Chapter 2 of CP18/25, the PRA proposed to:

• Amend the rule to allow firms to submit a complete SMF application within 12 weeks of the absence occurring, rather than require submission, review and determination within 12 weeks. Regulators would have a further (statutory) three months to review and determine the application.^{footnote [6]}
• Apply the Senior Manager Conduct Rules to those individuals who are not approved SMFs, operating under the 12-week rule.
• Add non-exhaustive examples in SS28/15 and SS35/15 of circumstances when the 12-week rule can be used and when it is not appropriate for it to be used.

12-week rule: Deadline to apply to submission of applications, rather than the determination of an application

2.5 Respondents overwhelmingly welcomed the change to the 12-week rule deadline. Several respondents suggested further extending the duration of the 12-week rule to between 24 and 26 weeks. Various reasons were given but the main argument was the need to allow more time and flexibility for firms to complete the recruitment process. This was especially underscored by some smaller firms.

2.6 The PRA notes the high level of support for its proposal but also that many respondents recommended that it go further. The 12-week rule allows firms to cover temporary or reasonably unforeseen absences.^{footnote [7]} Gaps in accountability caused by roles not being filled could potentially undermine the PRA's safety and soundness and policyholder protection objectives. However, the rule offers practical flexibility to manage short periods where a vacancy arises.

2.7 While the PRA understands that senior-level appointments may take some time to fill, the 12-week rule is not intended for vacancies that can be anticipated where arrangements for replacement can be started earlier. Further extension risks becoming seen as the norm and diluting the PRA's expectations about firms' succession planning.^{footnote [8]}

2.8 As such, the PRA will implement this proposal as consulted. The PRA considers 12 weeks should be sufficient time to identify an individual to apply for an SMF role, even if only on an interim basis. The PRA will further consider responses received as part of Phase 2.

Apply Senior Manager Conduct Rules to individuals operating under the 12-week rule

2.9 Eight respondents commented on applying Conduct Rules to individuals under the 12-week rule, of which six were broadly supportive and two not supportive. However, most stressed the need for proportionality, with one noting that it is not reasonable to judge interim appointees to the same standard as a permanent SMF. Three argued that if temporary SMFs were held to senior manager conduct standards, then firms should also be able to allocate prescribed responsibilities (PRs) to them.

2.10 The PRA considers that it is reasonable for the Senior Manager Conduct Rules to apply to anybody performing an SMF role, even on an interim basis and without approval. The PRA notes the points raised about proportionality and considers that the existing expectations in SS28/15 and SS35/15 already address this. For example, both state that the length of time in role and the timelines within which action could have been taken are among the considerations the PRA takes when judging whether an individual took reasonable steps.

2.11 The PRA will implement this proposal as consulted but will clarify how to report conduct rule breaches by staff who are subject to the Senior Manager Conduct Rules but are not SMF holders, including individuals performing an SMF role under the 12-week rule. The PRA is making changes to require breaches of the Senior Manager Conduct Rules by such persons to be reported via Form L, which has been amended to facilitate this (Appendix 2).

2.12 The PRA has decided to use Form L to allow for any submissions, due to further planned work in this area during Phase 2, and to avoid firms making two sets of systems changes.

Non-exhaustive examples when the 12-week rule can be used

2.13 Eight respondents commented on the non-exhaustive examples of when the 12-week rule may or may not be used. While there was general support for including these, some respondents felt they should also cover situations where it was not appropriate for an incumbent to work their notice period. Two said the 12-week rule should be available to firms to fill in gaps as they see fit.

2.14 The PRA does not agree that the application of the rule should be expanded to cover absences in all circumstances. It considers this would undermine the expectation that firms should have effective and up-to-date succession plans for each SMF. As noted above, the rule is in place to cover temporary, or reasonably unforeseen absences.

2.15 The PRA's draft list of examples of use of the 12-week rule already includes a case where sickness leads to an individual resigning or taking extended leave at short notice. The PRA accepts that similar vacancies can arise when an individual leaves due to performance issues or where it is appropriate for them to take 'gardening leave' if they are joining a competitor firm. An extra example has been added for those, and similar, cases. Otherwise, the PRA will adopt this proposal as consulted.

Clarifications on fitness and propriety tests

2.16 In CP18/25, the PRA proposed to add additional text in SS38/15 and SS35/15 to make clear that PRA assessments of an individual's fitness and propriety (F&P) take account of any previous approvals in other jurisdictions or similar accountability regimes and experience as an SMF in other firms.

2.17 All six respondents on this point supported the F&P proposal. One cautioned against too stark a distinction between individuals with and without SMF experience noting this could create a 'closed shop', which could incentivise firms to recruit from the existing pool rather than bring in new talent. Another respondent drew attention to the time for approvals and called upon the regulators to approve all non-complex cases within one month. A further respondent called for a more risk-based approach to F&P assessments based around trigger points, rather than the current annual assessment.

2.18 Chapter 4 of both SS28/15 and SS35/15 provide detail about the various factors that the PRA expects firms to consider in F&P assessments. In addition, the joint ESMA and EBA Guidelines on assessment of suitability of members of the management body and key function holders^{footnote [9]} also already cover consideration of previous senior roles, including those in other firms. The PRA does not consider that the additional brief reference to past experience in its expectations will discourage firms from advancing new talent. More broadly, the regulators have previously recognised^{footnote [10]} that there is no single 'right background' for such appointments.

2.19 In July 2025, the PRA has committed to accelerate the speed of regulatory approvals and supports the Government's plans to shorten certain deadlines in legislation. As part of this work, the PRA has already reduced the median determination time for SMR cases from 62 days (December 2024 - February 2025) to 28 days (December 2025 - February 2026).

2.20 Currently, annual F&P assessments are mandated by legislation (FSMA s.63F). The PRA will consider more fundamental changes as part of Phase 2 reforms.

2.21 The PRA will adopt the proposed wording as consulted.

Individuals in scope of the Senior Managers Regime

2.22 In Chapter 3 of CP18/25, the PRA proposed to:

• amend its guidance to clarify its expectations about which individuals should be in scope of the Group Entity SMF7;
• extend the scope of SMF7 to controllers and their representatives; and
• exempt certain resolution-related roles from the SM&CR.

Group Entity Senior Manager (SMF7)

2.23 The SMF7 role currently applies to individuals who have significant influence over the management or conduct of one or more aspects of the affairs of a firm in relation to its regulated activities and who are employed by (or are an officer of) a parent undertaking or holding company of a firm, or another undertaking that is a member of the firm's group.

2.24 In Chapter 3 of CP18/25, the PRA proposed to:

• revise SS28/15, SS35/15 and SS5/21 to clarify the extent of the existing policy and scope of SMF7 roles, including examples; and
• add additional text in SS28/15 (paragraph 2.16) and SS35/15 (paragraph 2.13) to clarify the existing approach that while firms have a responsibility to identify SMF7s, the PRA may also identify individuals in parent or group companies who may be performing an SMF7 on behalf of a UK-regulated firm. Where the PRA identifies an SMF7, the firm should apply for their approval without delay.

2.25 There were mixed views from the 22 respondents who commented on the SMF7 proposals. Several respondents found the additional clarifications helpful. Two of these called for more examples/scenarios.

2.26 However, there were also a number of concerns raised.

Scope

2.27 Seven respondents claimed the proposals would materially increase the number of SMFs, although one acknowledged this was not the intention.

2.28 The PRA confirms that the intent of the Phase 1 proposals was not to widen the scope of SMF7 beyond the extension to controllers and their representatives (covered below). The clarity provided by the proposed examples is intended to help ensure consistent application of the existing scope across all firms. This may lead some firms to conclude that one or more individuals should be classified as SMF7s. However, the PRA considers this will affect only a small number of individuals, even taking account of the addition of controllers. At the same time, the PRA expects there will be situations where firms will now be more confident that individuals do not fall within scope of SMF7. Overall, the PRA continues to expect that there will not be any significant net increase in SMF7s across the industry.

2.29 In July 2025, HMT consulted on the introduction of a notification-only process for certain senior management functions. If taken forward, the PRA will consider whether such a notification approach is appropriate for certain SMF appointments. This may include some or all the SMF7 population.

2.30 One respondent said the guidance for insurers should more explicitly integrate Solvency II rules, notably for those with key function holder roles. The PRA notes that SS35/15 includes material about links to key function holders in paragraph 2.5.

PRA identification of SMF7s

2.31 Five respondents challenged the existing policy that the PRA could identify SMF7 holders, mostly on grounds of competitiveness, and one said that supervisors may not understand group structures well enough.

2.32 The PRA does not consider that the clarification of its ability to identify individuals as SMF7s represents an expansion of its policy remit. For branches, existing expectations already make it clear that the PRA may require firms to apply for additional SMFs, including SMF7.^{footnote [11]}

2.33 The additional guidance proposed in CP18/25 was included because, unlike other, more role-specific functions, SMF7 applies across a range of business models and governance arrangements. The previous guidance in SS28/15 (paragraph 2.16) and SS35/15 (paragraph 2.13) had led some firms to incorrectly conclude that SMF7 designation was a matter for them alone to determine. While the guidance already said this was 'in the first instance' the amendment proposed in CP18/25, that the PRA can also identify SMF7s, has made the existing policy more explicit. The PRA expects to make such a determination only in exceptional circumstances and after close discussion with firms.

2.34 The PRA does not agree that supervisors may not sufficiently understand a group's structure when considering whether an individual should be an SMF7. Any such determination would only be made in close dialogue with the relevant firm, which would have plenty of opportunity to explain why it does not consider SMF7 status to be appropriate. Such discussions already take place, and the additional guidance is intended to make the PRA's existing supervisory practice more transparent.

Alignment with FCA

2.35 Other respondents highlighted potential non-alignment with the FCA's proposals in its parallel consultation. One considered that the PRA had adopted a more expansive interpretation of significant influence, suggesting that any strategic oversight or influence may fall into scope of SMF7.

2.36 Most of the comments about differences between the PRA and FCA policy drafting suggested that the regulators should fully align their guidance. The PRA considers that such differences in guidance that do exist are justified by differences between solo and dual-regulated firms, and that it would not be practical to fully align guidance.

2.37 The PRA considers that, excepting the PRA's addition of controllers and their representatives to scope,^{footnote [12]} its SMF7 regime is substantively the same as the FCA's. There is no material difference between the rules in Chapter 5 of the Senior Management Function Parts of the PRA Rulebook and FCA SUP 10C.5B.1R.

2.38 Both regulators' guidance emphasise that determinations must be made on a case-by-case basis considering the level of influence and direction that a group official has over a UK-regulated entity.

2.39 The PRA does not agree that it has made a more expansive interpretation of 'significant influence' than the FCA. Both sets of guidance state that the level of responsibility for taking decisions is a factor when determining if an individual outside the UK-regulated firm is an SMF7.^{footnote [13]}

UK vs overseas/non-regulated firms

2.40 One respondent said that the SMF7 regime should refocus on where there is a non-UK, or non-regulated locus of accountability. It noted that group leadership for UK-headquartered firms is already in scope for SM&CR, so the SMF7 role provides little additional value in expectations of accountability. Another respondent questioned why there were separate tables of examples for UK-headquartered and international firms, given their content was very similar.

2.41 The PRA does not agree with the comment that the SMF7 regime should focus on cases where group/parent accountability is outside the UK or outside the regulatory perimeter. From its inception, SM&CR was intended to capture accountable individuals, regardless of whether they were based in the UK or overseas.^{footnote [14]} The PRA notes that the leadership of UK-headquartered groups will generally already be in scope of the SM&CR. The regime already builds in proportionality to reflect this, allowing for applications for SMF7 from UK-headquartered firms to be made at the same time as other relevant SMF applications. For example, an individual acting as a chief executive of both a UK-headquartered group and as chief executive of the PRA-regulated entity might be both an SMF7 and an SMF1. This minimises the level of duplication involved in the application process for such firms.

Competitiveness

2.42 Six respondents stated that, in their view, the overall effect of the proposals is damaging to the attractiveness of the UK market.

2.43 The PRA considers that its explanations above should reassure firms that its proposals are not an expansion of the scope of SMF7 (beyond the inclusion of controllers), nor an expansion of its powers. The PRA also does not consider that the proposals will lead to a significant net increase in the SMF7 population, as explained in CP18/25. The proposals aim to clarify the existing position to facilitate a more consistent application of SMF7 appointments across the financial sector.

Setting and implementing strategy

2.44 Several respondents focused on the distinction between individuals at group level responsible for setting strategy and those who were engaged in implementing strategy in the UK-regulated firm. Some of those pointed out that one of the newly proposed examples included 'group executives with responsibility for setting the strategy in areas that are key to the business model of the PRA-authorised entity'. Respondents felt this contradicted the pre-existing wording in CP28/15 and CP35/15 that the 'PRA's focus is on those individuals who […] are directly responsible for implementing the group's strategy in UK relevant firms'. Some of those respondents stated that scope should not include any individuals whose remit is group wide unless they had direct involvement in implementing the strategy of the UK-regulated entity.

2.45 The PRA considers that the SMF7 role plays a critical part in the regime by ensuring accountability for those individuals who exert significant influence over a UK-regulated entity, despite not working directly for it.

2.46 FSMA section 59ZA already captures as SMFs those persons responsible for managing one or more aspects of a PRA-authorised firm's affairs, where those aspects could involve serious consequences for that firm or for business or other interests in the UK more generally.

2.47 A core part of the PRA's strategy of responsible openness to highly interconnected branches and subsidiaries is that persons who may not work directly for the PRA-authorised firm are within the scope of the SMF7. The PRA considers that such persons should be accountable to the PRA for their decisions and actions in relation to the UK business.

2.48 The PRA acknowledges industry concerns in relation to the wording in the new tables of examples and existing wording about strategy setting. The proposed guidance has been amended to reflect that the policy intent is to capture those individuals with responsibility for implementing the strategy, or who otherwise may be able to affect the safety and soundness of a Relevant Firm's UK-regulated activities, rather than broader group-wide strategy setting.^{footnote [15]} Paragraph 2.14A and the example table in SS28/15 have been redrafted to link SMF7 expectations with those set out in SS5/21 - International banks: the PRA's approach to branch and subsidiary supervision. There is no equivalent to SS5/21 for insurers,^{footnote [16]} so the new paragraph 2.11A in SS35/15 remains as consulted upon.

2.49 The PRA has also consolidated the tables of examples in each supervisory statement so that one table covers both international and UK-headquartered firms. This is to simplify the guidance.

2.50 The PRA considers that the list of non-exhaustive examples for SMF7 designation now strikes the right balance between supporting firms in how to make determinations, while avoiding prescriptiveness.

2.51 The PRA will implement the SMF7 proposals, largely as consulted, but has amended and consolidated the new tables of examples in SS28/15 and SS35/15 to clarify the position on strategy setting. The PRA has also made some other edits to improve clarity and consistency and will further review the full content of the two supervisory statements as part of Phase 2.

Extending SMF7 to Controllers

2.52 In Chapter 3 of CP18/25, the PRA proposed to amend the Senior Management Functions Parts of the Rulebook and Chapter 2 of both SS28/15 and SS35/15. This is to bring controllers and, where appropriate, their representatives within scope of SMF7 designation where they have significant influence over the day-to-day management of a PRA authorised firm.

2.53 This proposal attracted less comment than the other SMF7 proposals and most of those respondents expressed agreement in principle. Some respondents added caveats including the need to address broader SMF7 comments, and a desire for examples. One respondent said the proposal should be justified with a cost benefit analysis and another respondent was opposed on competitiveness grounds.

2.54 The PRA considers that most of the reservations expressed were made in the wider context of the SMF proposals. The PRA does not consider that additional, dedicated examples are warranted because the new guidance should be sufficient to support firms assessing when SMF7 status is appropriate. As noted in CP18/25, controllers are already required to obtain PRA approval, which includes an assessment of their reputation, knowledge, skills and experience,^{footnote [17]} so the additional administrative burden is not considered to be material. CP18/25 did cover controllers in its cost benefit analysis and concluded that the additional benefits from ensuring accountability of all individuals able to direct the affairs of regulated firms would outweigh the costs that might arise from bringing them into scope.

Resolution administrators

2.55 In Chapter 3 of CP18/25, the PRA proposed to exempt resolution administrators or officials performing similar roles appointed by the Bank of England or HMT to manage or oversee a bank or building society in stressed conditions from SM&CR.

2.56 The five responses referring to this proposal were either supportive or neutral.

2.57 The PRA will make the exemption as consulted.

The application and ongoing operation of the SM&CR

Statements of Responsibility (SoR) and Management Responsibility Maps (MRM) submission deadlines

2.58 In CP18/25, the PRA proposed to amend SS28/15 and SS35/15 such that submission of updated SoRs and MRMs should happen no later than six months following a significant change in responsibilities.

2.59 Most respondents agreed with the SoR and MRM proposals but a majority of those who commented called for the PRA to align with the FCA and only expect the latest documents within the six-month period, rather than all versions created between submissions.

2.60 Several respondents said that the proposals may not materially reduce the burden on firms or may even add to complexity. For example, by creating bottlenecks. Some of those respondents recommended that firms have the option to continue to submit the documents upon each change.

2.61 Some respondents recommended that submissions could be bundled together by group, rather than each regulated firm having to submit separately. There were also various other calls for a more efficient process. One respondent suggested 'at all times' be removed from the rules requiring SoRs and MRMs to be comprehensive and up to date.

2.62 The PRA accepts the comments that its expectations on submissions should align with the FCA. A sentence has been added to CP28/15 paragraphs 2.54 and 2.58 and CP35/15 paragraphs 2.86 and 2.91 stating: 'If there have been several significant changes during a submission period, a firm need only submit the latest version'.

2.63 For firms that may prefer to submit revised SoRs and MRMs as they arise, the PRA considers that the proposed wording ('no later than six months') would still permit this.

2.64 The PRA has taken note of suggestions for process efficiencies and will factor these into its Phase 2 work.

2.65 The PRA has decided to retain 'at all times' in its rules because it considers that defining parameters for when documentation could be considered up to date would add complexity for little value. It is consistent with FCA wording in SUP 10C.11.20R and SYSC 25.2.1R.

Small firm threshold for Prescribed Responsibilities (PRs)

2.66 In Chapter 4 of CP18/25, the PRA said it had decided not to increase the threshold at which a deposit taker would become a small firm for the purposes of the SM&CR.

2.67 One respondent commented specifically on the PRA's decision not to increase the PR threshold, recommending that the PRA consider this further in Phase 2.

2.68 Several other respondents made broader suggestions for changes that were not consulted upon.

2.69 One respondent noted that PRs should be limited to those in the Rulebook and creation of quasi-PRs through expectations should be stopped. It added that some firms benefited from the clarity provided by a reference list. Two respondents said the Rulebook PR list should be reviewed.

2.70 The PRA will take account of the comments received during its Phase 2 work.

Regulatory references: Incomplete investigations

2.71 In CP18/25, the PRA proposed to amend SS28/15 and SS35/15 to clarify that, where an internal investigation into misconduct was commenced but disciplinary measures were not concluded because the individual left the firm, firms should consider whether to include details of this in regulatory references.

2.72 Seven respondents supported the proposal to amend the expectations about incomplete investigations, while two opposed it on the grounds that disclosure may breach employment law.

2.73 One further respondent highlighted what it saw as differences between the PRA and FCA's approaches. It stated that the FCA's proposed wording (that misconduct or adverse information should only be disclosed where there are reasonable grounds for believing it occurred or that the information is true) appeared to be inconsistent with the PRA's proposal (which the respondent considered effectively 'left it up' to firms to decide whether to disclose these details). The respondent was concerned this might lead to divergent practices.

2.74 Some respondents made further suggestions for changes that were not consulted upon.

2.75 The PRA does not consider that the guidance encourages a breach of employment law, nor that there is a divergence between the relevant PRA and FCA approaches concerning incomplete investigations. The text proposed by the PRA in CP18/25 is clear that firms should carefully consider their legal duties when deciding whether to include details of incomplete misconduct investigations in a regulatory reference. Those duties include that 'firms need to comply with their legal obligations under statutory and common law' and 'the firm should have reasonable grounds for believing that the misconduct has taken place'^{footnote [18]} which is very similar to the wording proposed by the FCA in its CP25/21. Further, as to the veracity of the information, the PRA's existing Fitness and Propriety Rules provide that firms are not required to disclose information that has not been properly verified.^{footnote [19]}

2.76 The PRA will update the guidance as consulted and consider other recommendations as part of its Phase 2 work.

Regulatory references: Deadline for responses

2.77 In CP18/25, the PRA stated that it did not propose to change its guidance to set a window for responding to requests for regulatory references. In its consultation, the FCA proposed to reduce its expectation from six to four weeks.

2.78 Several respondents called for the PRA to align with the FCA. Two respondents noted the non-alignment.

2.79 The PRA does not consider that it needs to set an expectation for response times for regulatory references, recognising that this might assist firms on-boarding SMF holders but also adding time pressure to those preparing references. In practice, the regulators' regimes will align because the FCA's four-week window will be binding for all firms.

Criminal record checks (CRCs)

2.80 In CP18/25, the PRA proposed to amend relevant application forms to extend the period for requiring a CRC to be undertaken from three to six months prior to submission. It also proposed to amend SS28/15 (paragraph 4.19) and SS35/15 (paragraph 4.12) to clarify that, for non-SMF holders who submit Form M, (such as non-executive directors and Key Function Holders), the PRA expects a firm to obtain a CRC.

2.81 Most respondents commented in support of the CRC extension to six months prior to submission.

2.82 Three respondents supported the proposal to require CRCs for non-SMFs.

2.83 Three respondents recommended that the PRA also adopt the FCA's proposal to remove the requirement for firms to undertake CRCs where an existing SMF holder is applying for an SMF in the same firm or group.

2.84 Two respondents suggested longer periods of up to nine months for overseas checks and one of those said that the regulators should recognise recent checks to avoid re-work. Another reported that the regulator's view on whether an overseas check could be obtained differed from its own legal advice. The same respondent said that Authorisations teams at the regulators had advised that checks up to 12 months old will be accepted where the individual is subject to annual checks by the firm and asked that this flexibility be retained.

2.85 The PRA will implement the extension to six months for CRCs, prior to submission.

2.86 The PRA will also amend the Fitness and Propriety Parts of the PRA Rulebook^{footnote [20]} to remove the requirement for firms to undertake CRCs where an existing SMF holder is applying for an SMF in the same group. The rule previously exempted the CRC requirement if the SMF was moving roles in the firm. The amendment also allows for a gap of up to one month between roles. These additional changes will align the PRA and FCA approaches across the full population of firms subject to the regime. Consequential amendments will also be made to Form A (application to perform an SMF) and Form E (internal transfer of an SMF).

2.87 The PRA considers this will reduce burden and costs for firms for internal moves by expediting the application process and removing the costs of obtaining the CRC. The PRA also considers this does not increase risk, since SMFs are obliged to disclose relevant information about criminal proceedings to the regulator, and since other requirements to disclose convictions would remain in place.

2.88 Firms would remain responsible for determining whether the individual is fit and proper for the SMF role. Therefore, they may choose to undertake CRCs where needed, especially where they have not conducted one for some time.

2.89 As part of the wider publication update, the PRA has published a document on its Authorisations webpage clarifying how we assess international candidates, which includes expectations when it comes to obtaining CRCs.

Conduct Rules and reasonable steps

2.90 In CP18/25, the PRA said it did not propose to expand on existing guidance in SS28/15. Five respondents either supported or noted this decision not to expand on the reasonable steps guidance. Three made suggestions for broader reforms to the Conduct Rules, some of which would require legislative change, which were not consulted on. The PRA will consider the further suggestions during Phase 2 of the reforms.

Certification regime

2.91 In CP18/25, the PRA proposed updates to SS28/15 and SS35/15 regarding its expectations for the annual assessment in the certification regime.

2.92 The updates clarify that the PRA has no set expectations for the form or procedures used by a firm. They also state that a firm can build on or use various internal systems, procedures and processes available to them. However, the firm must clearly record that it is satisfied that the person is fit and proper to perform the function to which the certificate relates, and the aspects of the firm's affairs of which the person will be involved in when performing the function. Firms must also allocate the PR for the firm's performance of its obligations under the certification regime (PR B) to an accountable SMF holder.

2.93 Most respondents focused on HMT's proposal to remove the certification regime from legislation. However, the PRA's proposed SS amendments were explicitly welcomed or noted by nine respondents.

2.94 The PRA will introduce the SS amendments as consulted. Firms should note that planned FCA system changes will remove FCA material risk taker (MRT) roles where an individual at a dual-regulated firm is also certified by the PRA in one of its certification functions (MRT, significant risk taker, or key function holder) at the same firm. This will minimise overlap, removing some operational burden from firms.

Key Function Holders (KFH) and notifications

2.95 In CP18/25, the PRA proposed to clarify expectations in SS35/15 that the SMF responsible for identified key functions would only be required to submit the SMF application form and accompanying material and not a Form M notification as well.

2.96 Six respondents supported the KFH notification proposal. One of the respondents confirmed that KFHs are often also Senior Managers and Significant Management Certified Persons within firms, leading to confusions and duplication. One sought guidance about the assessment process for a Key Function Holder in a third country branch. Another questioned why the expectation had not been included in SS28/15.

2.97 The PRA will introduce the SS amendments as consulted. SS28/15 does not address this point because the concept of Key Function Holders originates from Solvency II and is only relevant to insurers. The PRA will consider further reforms and guidance in its Phase 2 work.

Other matters raised

2.98 Several respondents made suggestions for matters including scope, process and systems. These will be considered in the PRA's Phase 2 work.

Navigating the SM&CR

2.99 In Chapter 5 of CP18/25, the PRA made several proposals to make existing guidance more navigable.

Creation of an SM&CR policy index

2.100 The PRA proposed a new SM&CR policy index, broken down into the most prominent regime components and a description of where the relevant information can be found.

2.101 Ten respondents commented on the policy index proposal, all supporting it. One said this should be 'nonbinding support, […which did…] not alter underlying rules nor […] constrain supervisory discretion'. Another asked for this to include the relationship between Solvency II and SM&CR requirements. Two of the respondents noted the fragmented nature of rules and guidance across several sources. One of them characterised the proposal as a 'workaround' and said it would be better to consolidate the key components in one place. It cited responsibility for identifying and managing financial risks from climate change as a quasi-Prescribed Responsibility in SS3/19 (paragraph 3.4 - since superseded by SS5/25, paragraph 4.6) rather than within the list of Prescribed Responsibilities in the PRA Rulebook.

2.102 The PRA will proceed with the policy index as consulted and consider wider consolidation of rules and guidance as part of Phase 2.

Other proposals

2.103 The PRA proposed to:

• rename the 'Key policy' section on the 'Strengthening accountability' page to 'SM&CR and governance key policy resources' and add various links;
• include a link to the 'Strengthening accountability' page in SS28/15 and SS35/15;
• include a reference to the SM&CR inventory that is currently published on the 'Strengthening accountability' page (in the 'Statements of responsibilities' section) in SS28/15 and SS35/15;
• remove all references to EU policy materials; and
• use non-gendered language.

2.104 Few respondents commented on any of these points and those that did largely noted them neutrally. The PRA will implement these changes as consulted.

Equality and diversity

2.105 Three respondents commented on this aspect. Two were comfortable that the PRA's proposals had no equality and diversity implications. However, another respondent said that the regime may discourage individuals from taking senior positions, particularly those from less affluent backgrounds, who may not enter lightly into the regime where it may imperil their assets.

2.106 Socio-economic inequality is covered in Section 1 of the Equality Act 2010, which states that relevant public authorities 'must […] have due regard to the desirability of exercising them in a way that is designed to reduce the inequalities of outcome which result from socio-economic disadvantage'. This section of the Act has not yet been commenced in England, but is in force in Scotland and Wales, since 2018 and 2021 respectively.

2.107 The PRA notes that the SM&CR was established before the Act took effect in any part of the UK. It does not consider that the Phase 1 proposals will have a material effect on socio-economic equality but will consider this aspect as part of its more wide-ranging work in Phase 2.

Cost benefit analysis (CBA)

2.108 The PRA's cost benefit analysis (CBA) of the proposed policy was published in CP18/25 and no comments were received. The PRA does not consider that the further changes introduced by this PS will have a material impact on the CBA.

3: Wider feedback and other matters

3.1 The PRA received further comments that fell outside the scope of the proposals consulted upon. In part this was because several respondents issued joint comment letters that also addressed proposals made in the FCA and/or HM Treasury consultations.

3.2 Some comments gave suggestions for broadening the scope of the Phase 1 changes, but the PRA would need to consult further on those and so they will be considered as part of the further development of policy in Phase 2.

3.3 Two respondents commented on aspects not directly related to the SM&CR. One said it would welcome discussion about the application of the remuneration regime to individuals based overseas, where only part of their role and pay pertains to the UK and particularly where local regulations were equivalent. The PRA has only recently updated its remuneration rules but will bear this in mind for the future. The other comment related to asset management firms and is relevant to the FCA.

SMF approval process enhancements

3.4 In addition to the policy changes consulted on under CP18/25, the PRA received comments on the way in which the regime is operationalised and the application determination process. Those comments focused on the following aspects of the regime:

• simplicity and accessibility of the submission forms;
• clarity on submission material required at the gateway; and
• transparency on assessment progress and proportionality, particularly for smaller firms and individuals from overseas.

3.5 Further to this feedback and alongside the PS, the PRA will be updating its external SM&CR webpage including updated guidance on its assessment processes, with reference to clock stops and communications as well as the publication of Q&As from its SM&CR webinar in July 2025, focused on international candidates.

3.6 The PRA also continues to collate, and respond to, comments received via its post-assessment survey that firms receive following the determination of an application.

3.7 The PRA's July 2025 CP noted that the latest PRA figures showed that, in the period March - May 2025, 100% of SMF applications were determined within the three-month target. As of March 2026, the latest PRA figures showed that, in the period December 2025 - February 2026, 100% of SMF applications were determined within the three-month deadline, and 98% of SMF applications were determined within a two-month target.

3.8 Also in July 2025, the PRA's chief executive wrote to the Chancellor of the Exchequer about speed of regulatory approvals. That included, among other things, the announcement of a new target to complete at least 50% of SMF applications within 45 days. In the period from December 2025 to February 2026, 85% of applications were completed within that target.

Correction to SS35/15 - Strengthening individual accountability in insurance

3.9 The PRA has identified that some bullet points in paragraph 5.18 were deleted in error when SS35/15 was updated in June 2021, following publication of PS11/21. The missing bullets cover the PRA's expectations in situations where a firm cannot obtain all necessary references before applying to the PRA for approval to appoint an SMF. The PRA will reintroduce the missing text.

Other non-material amendments

3.10 The PRA has also taken the opportunity to update certain links and cross-references and make other non-material amendments to improve the consistency of wording between SS28/15 and SS35/15.