SMCR Reform: What Housing Associations Need to Know

On 15 July 2025, HM Treasury (HMT), the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) each published consultations proposing significant reforms to the Senior Managers and Certification Regime (SMCR). These proposals together aim to reduce administrative burden while preserving the regime’s core purpose: ensuring accountability and responsibility within financial services firms. The three consultations will close on 7 October 2025. 

Background

The SMCR was introduced after the 2008 financial crisis and was extended to all FCA-authorised firms in 2019, including housing associations with consumer credit permissions. Housing associations are usually classified as “limited scope” firms, meaning they are subject to fewer requirements than banks or investment firms - but they must still ensure that certain senior managers are approved by the FCA, and other key staff must be certified as “fit and proper” to perform their roles. All staff involved in the delivery of the regulated activities must also follow basic conduct rules.

What's changing?

1. HMT’s Proposals: Structural Reform

HMT is proposing fundamental changes to the statutory foundations of the SMCR, including:

• Removing the certification regime from statute: This would mean that firms no longer need to assess and certify non-senior staff as “fit and proper” under law. The FCA and PRA are expected to introduce more flexible rules in replacement of the statutory certification regime.
• Power for the regulators to reduce the number of roles requiring FCA pre-approval: Some roles may no longer need formal approval, though it is likely that firms would still need to carry out conduct checks and notify the regulator.
• Simplifying documentation: HMT is also asking whether overly detailed requirements - such as those for Statements of Responsibilities and Conduct Rules - should be replaced with more proportionate alternatives.

2. FCA’s Proposals: Practical Changes for Now

The FCA’s consultation (CP25/21) focuses on practical changes that can be implemented ahead of legislative reform. The FCA has suggested a number of amendments to guidance, timeframes and requirements in order to streamline processes, provide clarity and increase the efficiency of the SMCR.  The key proposals include:

• More time to apply for Senior Manager approvals in temporary or unexpected situations.
• Less frequent updates to Statements of Responsibilities - firms would only need to submit changes every six months instead of after each change.
• Removing duplication where individuals are certified for multiple roles.
• Clearer guidance on annual “fit and proper” checks.
• Longer validity for criminal record checks.
• Extended deadlines for updating the directory of certified staff.
• Faster turnaround for regulatory references.
• New guidance on handling breaches of Conduct Rules.

These changes are especially relevant for limited scope firms, including housing associations, and could reduce day-to-day compliance burdens.

What This Means for You

The current regime already includes a degree of proportionality such that many housing associations do not suffer undue rigour and the overly complex administrative requirements of the entire regime. However, any further reduction in unnecessary red tape will be welcome - especially given the broader regulatory pressures facing the sector.

These reforms also sit alongside the ongoing overhaul of UK consumer credit regulation, with the first phase of consultation having just closed on 21 July 2025. With so much change underway, it’s important to understand what consumer credit activities your organisation is engaged in and ensure your permissions are accurate and up to date.

For tailored advice on how these changes may affect your organisation, please contact Alice Overton.