SMCR Reform 2026: What It Means for Firms Hiring Senior Managers

For most of its life, the Senior Managers and Certification Regime has been criticised as heavy on process and slow in practice. In 2026, the regulators and HM Treasury finally began to change that. The first phase of reform is already in force, and more substantial legislative changes are on the way. For boards and hiring managers at regulated firms, the reforms change some of the practical mechanics of senior recruitment. They do not change the personal accountability that sits at the heart of the regime, and that distinction matters when planning your next senior hire.

What Has Already Changed

On 22 April 2026, the FCA and PRA published the first phase of reforms, in policy statements PS26/6 and PS12/26, with most of the FCA's changes taking effect two days later. Three are particularly relevant to hiring.

The 12-week rule now works in firms' favour. When a senior manager leaves unexpectedly, firms can appoint someone to cover the role temporarily without prior approval. Previously, the replacement had to be approved within 12 weeks, which put firms at the mercy of the regulator's timetable. Now firms have 12 weeks to submit an application, and the person covering can continue until it is decided. The trade-off is that covering individuals are now subject to the Senior Manager Conduct Rules from day one. How the updated 12-week rule works in practice is worth understanding before you need it.

Fewer firms fall into the Enhanced tier. Several of the size thresholds that push solo-regulated firms into Enhanced status have been raised, including assets under management (from £50bn to £65bn) and consumer credit lending revenue (from £100m to £130m). Enhanced status brings additional senior roles, a Responsibilities Map and the Overall Responsibility requirement. Firms close to the old thresholds should check whether their obligations have changed. SMF Capital's guide to which senior manager roles apply at each firm tier sets this out designation by designation.

Approvals should move a little faster. Criminal record checks for senior manager applications now stay valid for six months rather than three, and are no longer required for certain moves within a group. Individually these are small changes, but together they remove some of the friction that has made senior appointments at regulated firms take so much longer than equivalent hires elsewhere.

What Is Coming Next

The bigger changes need legislation. HM Treasury has confirmed it will remove the Certification Regime from the Financial Services and Markets Act, allowing the regulators to design a more proportionate replacement in their own rules. It also plans to let certain Senior Manager Functions move from pre-approval to a simpler notification process. The necessary provisions were included in the Financial Services and Markets Bill introduced in May 2026, and the regulators have said they will consult on the second phase once the legislation progresses.

Until that happens, the existing Certification Regime continues to apply, including annual fitness and propriety assessments. Firms should not start dismantling their certification processes on the strength of an announcement.

What Has Not Changed

This is the point most commentary skips. None of the reforms touch the core of senior accountability. Senior Manager Function holders still need a Statement of Responsibilities. They are still subject to the Duty of Responsibility, under which the regulator can act against them personally if they fail to take reasonable steps to prevent a breach in their area. The fit and proper standard still applies in full.

If anything, scaling back the Certification Regime makes the senior manager designations more central to how firms show the regulator who is accountable for what. For a clear overview of how the designations fit together, the complete guide to Senior Manager Functions is a useful starting point.

What This Means When You Recruit

The reforms make senior regulated hiring more workable, but they do not make it simpler to get right. Four practical points follow.

Plan cover before you need it. The new 12-week rule gives firms breathing space, but only if they use it. The strongest applications start on the day the vacancy arises. For control functions in particular, having a route to an experienced interim is now more valuable than ever. Specialists in fractional and interim senior manager cover can often place someone within days.

Get the designation right first. The designation determines the fit and proper bar and the scope of personal accountability. Mistakes here still cause more delays than anything the reforms have fixed. SMF Capital's analysis of common problems with FCA Form A applications shows how often the root cause is a poorly defined role.

Compliance and MLRO roles remain the pressure point. Compliance oversight and money laundering reporting roles are the most frequently recruited senior manager positions, and the ones where an unplanned vacancy creates most risk. The MLRO also carries personal criminal liability under the Proceeds of Crime Act, which shapes who will take the role. What SMF16 and SMF17 holders are accountable for is essential reading for any firm hiring into either.

Specialist knowledge still matters. A generalist search can find senior people. Finding senior people who will pass the regulator's assessment for a specific designation, in a specific sector, at a specific firm size, is a different skill. That is why SMF Capital was set up as a dedicated practice within our network, focused solely on FCA and PRA-regulated senior appointments.