Skip to content

Brought to you by

Dentons logo in black and white

UK Employment and Pensions Hub

The latest updates in employment, benefits, and pensions

open menu close menu

UK Employment and Pensions Hub

  • Home
  • Who We Are
    • Meet the team
  • How we can help
  • Events and training

HR focus on the recent SMCR reforms

By Sarah Jackman and Michael Calladine
May 12, 2026
  • Benefits and Executive Compensation
  • Financial Conduct Authority
  • Financial Services
  • Senior Managers Regime
Share on Facebook Share on Twitter Share via email Share on LinkedIn

What is changing?

The latest reforms to the Senior Managers & Certification Regime (SMCR), taking effect from April to September 2026, continue the FCA’s push towards greater clarity and proportionality.

The changes are framed as administrative simplifications, bringing clarity to several HR-related issues where this was often lacking in practice. With implications for recruitment, investigations, regulatory references and internal decision-making, HR teams and in-house employment lawyers should ensure they are up to speed.

Criminal record checks: a lighter touch approach

From April 2026, criminal record checks for new Senior Managers will be valid for six months rather than three and will not be required where an existing Senior Manager moves roles within their employing firm or its group.

This is intended to reduce the administrative burden, but does not change the underlying legal position. The FCA only mandates that criminal record checks are carried out for Senior Managers, although firms generally also opt to incorporate criminal records checks into their fitness and propriety assessments for Certified Staff.

The 12-week rule: more time but tighter expectations

The 12-week rule allows firms to temporarily appoint someone to carry on a Senior Manager function without regulatory approval where there is an unexpected gap that needs to be filled. Historically, the individual would need to be approved by the regulators within the 12-week period. However, the revised 12-week rule now allows firms 12 weeks to submit an application for a replacement Senior Manager, rather than 12 weeks to obtain approval.

This is a helpful and realistic change. However, the accompanying guidance makes clear that the rule is not to be used for succession planning. In particular, the FCA has listed scenarios where it considers the rule can and should not be used. Whether a departure was truly unexpected may be judged with hindsight and firms should ensure that their decision-making is clearly documented.

Any individuals making use of the 12-week rule will still be expected to comply with the Senior Manager Conduct Rules, with breaches needing to be reported as though the individual had regulatory approval. Firms should ensure their policies reflect this.

Fit and proper assessments as part of the appraisal process

The FCA has confirmed that annual fit and proper assessments for Senior Managers and Certified Staff may be integrated into appraisal processes and completed electronically. Certificates are still necessary but can be sent via email.

That flexibility is welcome.

Regulatory references: timing and guidance on Question G

Regulatory references remain one of the most complex areas of SMCR and the latest changes reinforce that position.

The timeframe for providing a reference will reduce from six weeks to four, requiring faster internal processes, which should allow for faster appointments.

More significantly, the FCA has clarified expectations around its catch-all Question G (any other information that is reasonably relevant to the assessment of fitness and propriety). Firms have often lacked clarity on how to approach this when an employee resigns before an investigation has concluded. The FCA has stated that firms are expected to exercise judgement, taking into account:

  • the seriousness and materiality of the alleged conduct;
  • whether there are reasonable grounds to believe it occurred;
  • fairness to the individual; and
  • whether disclosure is permissible under privacy, employment and other laws.

At the same time, the FCA draws a clear boundary – unproven allegations or mere suspicions should not be included. Where concerns about conduct are strongly held, there can be a strong desire to share information, but the legal and regulatory risks of overdisclosure are significant.

Conduct Rule breaches: regulatory reference requirements

The FCA has also clarified the interaction between Conduct Rule breaches and regulatory references.

Only breaches that result in disciplinary action should be reported in response to Question F of the regulatory reference template. Where no disciplinary action is taken, the matter does not fall within Question F.

However, that is not determinative. A breach that did not result in disciplinary action may still need to be disclosed under Question G, if it is relevant to fitness and propriety. This includes scenarios where an employee has left the firm before an outcome to any investigation has been reached (and it is therefore not possible to take disciplinary action).

This highlights the need for a broad assessment of the underlying conduct, making this an area where careful, well-documented judgement is essential.

Non-financial misconduct and personal conduct: expanding expectations

The SMCR changes align closely with the FCA’s broader focus on non-financial misconduct and its new rule and guidance coming into effect on 1 September 2026.

Senior Managers are expected to proactively disclose to the FCA prosecutions or convictions for offences involving fraud or dishonesty, as well as other offences unless clearly irrelevant to fitness and propriety. It is now beyond any doubt that conduct in an individual’s personal life may be directly relevant to regulatory assessments.

Even where a Conduct Rule breach does not lead to disciplinary action, firms should still consider whether there is a separate obligation to notify the FCA under Principle 11, which obliges firms to share information the regulator would expect to be told.

Conduct rule breach notifications: useful clarifications

The FCA has also provided some practical clarity in areas that have often caused confusion:

  • When an employer suspends an employee in order to investigate suspected misconduct that could amount to a Conduct Rule breach, this is not “disciplinary action” and does not, in itself, trigger obligations to report the suspected conduct rule breach to the FCA.
  • Similarly, only where a firm makes a remuneration adjustment in response to a Conduct Rule breach will there be a requirement to inform the FCA. There may be many other legitimate reasons for adjusting pay and these will not generally trigger a duty to report to the FCA.

A final observation

Taken together, these changes provide some useful clarification points for those working in, and advising on, SMCR people governance. The modifications reinforce that regulatory compliance, employment law and people management must work together in tandem.

Share on Facebook Share on Twitter Share via email Share on LinkedIn
Subscribe and stay updated
Receive our latest blog posts by email.
Stay in Touch
Financial Conduct Authority, financial services, Senior Managers Regime
Sarah Jackman

About Sarah Jackman

Sarah specializes in employment law and is counsel in Dentons' Glasgow office. With extensive in-house experience in the financial services sector, she is a trusted advisor to many of our high-profile clients. Known for aligning her legal advice with clients' business priorities and culture, Sarah often acts as an extension of in-house legal and HR teams. Her background in banking gives her a deep understanding of HR's role in regulatory matters, allowing her to advise on both contentious and non-contentious issues – particularly those related to the Senior Managers and Certification Regime. Sarah is also a frequent speaker at client events and has a keen interest in employee wellbeing. In 2024, she was selected as an inaugural member of our Shadow Executive Team.

All posts Full bio

Michael Calladine

Michael Calladine

You might also like...

  • Discrimination
  • Employment policies
  • Financial Conduct Authority
  • Financial Services

Consultation on Diversity and Inclusion proposals in the financial sector

By Sarah Jackman and Laura Jackson
  • Equality Act
  • Financial Conduct Authority
  • Financial Services
  • Legislative changes
  • Senior Managers Regime
  • Whistleblowing

Financial services employment law themes and insights: Spring/Summer 2025

By Sarah Jackman and Elouisa Crichton
  • Confidential information
  • Employment policies
  • Financial Conduct Authority
  • Grievance and disciplinary
  • Harassment
  • Non-disclosure agreements
  • Recruitment
  • Senior Managers Regime
  • Settlement agreements
  • Whistleblowing

Non-financial misconduct: insights from FCA findings

By Sarah Jackman and Katharine Harle

About Dentons

Redefining possibilities. Together, everywhere. For more information visit dentons.com

Grow, Protect, Operate, Finance. Dentons, the law firm of the future is here. Copyright 2023 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates. Please see dentons.com for Legal notices.

Categories

Dentons logo in black and white

© 2026 Dentons

  • Legal notices
  • Privacy policy
  • Terms of use
  • Cookies on this site