On 22 April 2026, the PRA published PS12/26, and the FCA published PS26/6. Together they constitute the first phase of the most significant reform of the Senior Managers and Certification Regime (SM&CR) since it was introduced in 2016.
Most of the changes in these policy statements are exactly what they appear to be: targeted, proportionate, and welcome.
- The 12-week rule gets more flexibility.
- Criminal record checks get a longer validity window.
- Statements of Responsibility deadlines become less onerous.
- The SMF7 scoping gets clearer.
These are genuine improvements for firms carrying the administrative weight of a decade-old regime.
But the most important thing to understand about Phase 1 is what it signals about Phase 2. HMT has proposed removing the Certification Regime from FSMA entirely.
The PRA plans to consult on reducing the number of SMF roles requiring pre-approval before appointment. Statements of Responsibility are going to be reviewed more fundamentally. The entire architecture of individual accountability in UK financial services is being redesigned, and Phase 2 is coming later in 2026.
Firms that process Phase 1 as a compliance update and wait for Phase 2 to land will be underprepared when it does. The right reading of these two policy statements is not ‘what has changed today.’ It is: what does today tell us about where this is going, and what do we need to have in place before it arrives?
Two regulators, one reform programme, three effective dates
This is two coordinated but distinct instruments with different scopes, different timelines, and specific obligations that apply depending on whether a firm is solo-regulated by the FCA or dual-regulated by both the FCA and the PRA.
FOR DUAL-REGULATED FIRMS
You must read both PS12/26 (PRA) and PS26/6 (FCA). The changes are coordinated but not identical. Some apply to both regulators’ populations identically. Others, including the SMF7 clarifications, the CRC group mobility extension, and the KFH notification changes, apply specifically to PRA-regulated firms. Reading only one policy statement will leave material gaps in your understanding of your obligations.
The three effective dates — Do not conflate them
Date | What Takes Effect |
24 April 2026 | The majority of Phase 1 changes across both PRA and FCA, including the 12-week rule redesign, Conduct Rules extension, SMF7 clarifications, CRC validity extension, SoR/MRM deadline change, and Form L updates. These are live now. |
10 July 2026 | System changes to Form A (application to perform an SMF) and Form E (internal transfer of an SMF). Until this date, the new six-month CRC validity period will not be recognised in systems — firms must manage this gap manually. |
1 September 2026 | FCA changes aligning SM&CR with PS25/23: Tackling non-financial misconduct in financial services. Applies to FCA solo-regulated firms and creates additional conduct obligations relevant to fitness and propriety assessments. |
The four changes with real operational bite
The SM&CR reform covers more than a dozen specific areas. Most are genuinely administrative: form updates, deadline extensions, guideline clarifications.
Four of them require more than an administrative response. They require a compliance team to ask whether their current frameworks, governance structures, and personnel classifications are still right.
The 12-week rule: The conduct rules extension changes the risk profile of interim cover
The headline change to the 12-week rule is well understood: the deadline now applies to submission of a complete SMF application, not to the determination of that application.
Regulators retain a further statutory period, expected to be reduced to two months under forthcoming legislation, to review and decide. That gives firms meaningfully more runway.
But the change that will require the most immediate operational attention is different. From 24 April, the Senior Manager Conduct Rules apply to any individual performing an SMF role under the 12-week rule, even without regulatory approval.
That individual, whether covering an unexpected CEO absence or filling an interim Risk function, is now personally subject to the same conduct expectations as a formally approved Senior Manager.
An individual performing an SMF without approval under the 12-week rule is now subject to Senior Manager Conduct Rules. Any breach must be reported via Form L. That is a material change for every firm that uses interim cover for SMF vacancies.
Firms need to assess whether their interim appointment frameworks make the conduct obligations explicit. They need to understand the Form L reporting process for breaches by individuals who are not approved SMF holders. And they need to review whether succession plans, which the PRA explicitly expects to be in place, are robust enough that the 12-week rule is being used as intended: for genuinely temporary or unforeseen vacancies, not as a standing arrangement.
The PRA was asked by many respondents to extend the 12 weeks to 24 or 26 weeks, but it declined, making its position clear: 12 weeks is sufficient to identify an interim candidate, and further extension risks normalising accountability gaps. Succession planning is the expected answer, not a longer interim window.
SMF7: Scope clarifications that may require group governance reviews
The PRA’s SMF7 clarifications are framed as making existing policy more transparent. For some firms, they will feel like that. For others, particularly international bank groups with complex holding structures, and firms with controllers who have significant day-to-day influence over UK-regulated entities, they will require a fresh assessment of who should be classified as an SMF7.
Three elements of the SMF7 changes deserve particular attention. First, the guidance now makes explicit that while firms have primary responsibility for identifying SMF7 individuals, the PRA can also make that identification, and where it does, the firm must apply for approval without delay. Second, controllers and their representatives are now within the scope of SMF7 designation, where they have significant influence over the day-to-day management of a PRA-authorised firm. Third, the distinction between setting strategy and implementing strategy has been clarified, with the focus on individuals responsible for implementing group strategy in UK-regulated entities, or whose decisions could affect safety and soundness.
FOR INTERNATIONAL BANK GROUPS AND HOLDING STRUCTURES
Review your current SMF7 population against the updated guidance in SS28/15 (banking), SS35/15 (insurance), and SS5/21 (international banks). Consolidated tables of examples now cover both UK-headquartered and international firm structures in one place. If any group-level executives have material influence over the day-to-day management of a UK entity and are not currently designated as SMF7, that gap should be assessed now — before a supervisory conversation prompts the question.
Resolution administrators and officials appointed by the Bank of England or HMT to manage deposit-takers in stressed conditions are now explicitly exempt from SM&CR. That removes a genuine ambiguity from the regime.
Criminal record checks: A genuine burden reduction, with a system gap until July
The CRC changes are among the most practically welcome in Phase 1. Two changes apply from 24 April: the validity window extends from three months to six months before submission, and firms are no longer required to undertake a CRC where an existing SMF holder is applying for an SMF in the same group, with a gap of up to one month between roles permitted.
The combined effect is material for firms that manage frequent senior appointments or internal SMF transfers across group entities. The cost and logistical friction of obtaining fresh CRCs for every internal move, particularly for international candidates, has been a genuine source of complaint. The group mobility exemption now aligns PRA and FCA approaches across the full dual-regulated population. Firms may still choose to conduct CRCs where appropriate, particularly where no recent check exists.
THE SYSTEM GAP TO MANAGE
Form A and Form E system updates will not reflect the new six-month CRC validity until 10 July 2026. From 24 April to 10 July, firms must manage this gap manually. The policy change is live, but the systems have not caught up. Note this in your SMF application processes now to avoid unnecessary re-work or delay.
Statements of responsibility and MRMs: Flexibility, not a free pass
The SoR and MRM submission deadline change is broadly welcome. Firms now have up to six months following a significant change in responsibilities to submit updated documents, and if multiple changes have occurred during that period, only the latest version needs to be submitted. The expectation to keep SoRs and MRMs comprehensive and up to date at all times remains in the rules.
The flexibility is genuine and will reduce administrative bottlenecks. But it is worth noting what it does not change: the underlying obligation for SoRs and MRMs to accurately reflect current responsibilities remains absolute. The six-month window is a submission deadline, not a documentation deadline. Internal records must still be current.
Firms that prefer to continue submitting on a live basis as changes occur may do so, the new wording explicitly permits it. For firms building toward a more periodic submission model, the six-month window now formally supports that approach.
Phase 2 is the real story, and it is coming this year
Every element of Phase 1 was constrained by what the existing legislative framework permitted. The PRA was explicit about this: the changes in PS12/26 represent what is possible without statutory change. Phase 2 requires HMT to legislate, and HMT has already consulted on the legislative changes needed.
Subject to parliamentary timing, the PRA has signalled a Phase 2 consultation later in 2026. The scope is substantially more significant than Phase 1:
- Removing the Certification Regime from FSMA: HMT has proposed this. If enacted, it would be the most fundamental structural change to the SM&CR since its introduction. The annual certification obligation, currently mandated by FSMA s.63F, would be removed from primary legislation. The practical implications for firms’ HR, compliance, and governance frameworks are substantial.
- Reducing pre-approval SMF roles: The PRA has signalled it will consider how to reduce the number of SMF roles requiring regulator pre-approval before appointment. HMT has consulted on a notification-only process for certain functions. If implemented, this would change the gatekeeping dynamics of senior appointments significantly.
- Reviewing Statements of Responsibility: A more fundamental review of SoR requirements is planned. The fragmented, multi-source nature of SM&CR rules, identified by multiple respondents as a key usability problem, is also being considered for consolidation.
- A more proportionate, flexible, and risk-sensitive overall framework: The PRA has explicitly described Phase 2 as delivering ‘a more proportionate, flexible and risk-sensitive approach.’ That is a phrase that signals structural redesign, not further administrative streamlining.
Firms that optimise their SM&CR operations for Phase 1 rules and then have to restructure again for Phase 2 will spend significantly more than firms that build for where the regime is going, not where it currently is.
Managing a Two-Phase Regulatory Transformation Without Creating 'Regret Spend'
The PRA used a specific term in its feedback to respondents who raised the risk of implementation costs being wasted if Phase 1 changes need to be unwound in Phase 2: “regret spend.” It names the core operational risk of getting the SM&CR response wrong, implementing Phase 1 changes in isolation, without reference to the Phase 2 direction of travel, and then having to repeat the work.
FinregE is built for exactly this kind of two-phase regulatory programme, where the right response is not ‘implement what is final’ but ‘understand the full trajectory and build toward it from the start.’
Mapping both policy statements as one connected obligation set
FinregE’s AI RIG ingests PS12/26 and PS26/6 simultaneously and extracts a single structured obligation register, mapped by institution type, effective date, and functional owner. Rather than reading two policy statements in parallel and manually reconciling scope, the compliance team starts with a structured, applicability-filtered picture of what applies to their firm and when.
Distinguishing Phase 1 from Phase 2 obligations in the implementation plan
FinregE’s AI RIGMAPS maps incoming regulatory obligations against a firm’s existing SM&CR framework, policies, governance structures, role designations, and documentation.
For Phase 1, it identifies where the 12-week rule frameworks, CRC processes, SoR deadlines, and SMF7 designations require updating. Critically, it also flags where Phase 1 changes intersect with the anticipated Phase 2 scope, so that implementation decisions can be made with Phase 2 in mind, not despite it.
SMF7 scoping support: group governance without the guesswork
For firms with complex group structures, the SMF7 clarifications create a concrete assessment need. FinregE supports this assessment by mapping the updated regulatory expectations to existing governance documentation and role descriptions, surfacing gaps and creating an evidenced record of the scoping decision.
Tracking Phase 2 readiness alongside Phase 1 implementation
The SM&CR reform is a running programme, not a point-in-time event. FinregE tracks obligations across both phases in a single implementation record, so that when Phase 2 consultation lands, the firm has a documented baseline of its Phase 1 compliance position and the areas of anticipated impact in Phase 2. The Phase 2 response builds on that foundation rather than starting from scratch.
What Firms should be doing and when
Most Phase 1 changes are live from 24 April. Some require immediate operational attention; others can be managed on a more measured timeline. Phase 2 planning should begin now — not when the consultation drops.
Change | Applies to | Effective Date | Priority |
12-week rule: deadline moves to submission (not determination) | All PRA/FCA-regulated firms | 24 April 2026 | Critical |
Senior Manager Conduct Rules apply to 12-week rule individuals | All PRA/FCA-regulated firms | 24 April 2026 | Critical |
SMF7 clarified; extended to controllers and representatives | PRA-regulated firms | 24 April 2026 | High |
Resolution administrators exempted from SM&CR | PRA-regulated firms | 24 April 2026 | Medium |
CRC validity extended: 3 months to 6 months prior to submission | All PRA/FCA-regulated firms | 24 April 2026 | High |
CRC waived: existing SMF holder moving within same group (up to 1 month gap) | PRA-regulated firms | 24 Apr (systems 10 Jul) | High |
SoR/MRM: 6-month deadline; latest version only required | All PRA/FCA-regulated firms | 24 April 2026 | Medium |
Regulatory references: incomplete investigation guidance updated | All firms | 24 April 2026 | Medium |
Certification Regime: annual assessment expectations clarified | All PRA/FCA-regulated firms | 24 April 2026 | Medium |
KFH notifications streamlined — SMF application only, no Form M | PRA insurers | 24 April 2026 | Medium |
New SM&CR Policy Index published | All PRA/FCA-regulated firms | 24 April 2026 | Low |
Form L: breach reporting extended to 12-week rule individuals | PRA-regulated firms | 24 April 2026 | High |
Form A and Form E system updates (new CRC validity recognised) | PRA-regulated firms | 10 July 2026 | Medium |
Non-financial misconduct alignment (FCA PS25/23) | FCA solo-regulated firms | 1 September 2026 | High |
Phase 2 consultation: Certification Regime, SoR, pre-approval scope | All regulated firms | Later 2026 (HMT dependent) | Plan now |
24 April was not a destination. It was a direction.
The SM&CR has been in place for a decade. The reform programme now underway is modernising it, reducing bureaucratic friction while maintaining the accountability backbone that justifies the regime’s existence.
But the reform is a two-act programme, and Act 1 went live on 24 April. Act 2 is coming later this year, and it will be structurally more significant.
Firms that treat Phase 1 as the answer, implement the specific changes, and return to business as usual will face a second implementation programme in 2026 that could have been substantially de-risked by treating the two phases as one connected journey from the start.
The question for every compliance and HR leader reading these policy statements is not only ‘what has changed today?’ It is: given where this regime is going, are we building our SM&CR infrastructure for the right destination?
The PRA calls it Phase 1 because Phase 2 is coming. Build for both.
See how FinregE maps the SM&CR Phase 1 changes to your firm’s obligations and prepares you for Phase 2.
From 12-week rule redesign to SMF7 scoping, SoR governance to Certification Regime readiness.
