CP18/25 – Review of the Senior Managers and Certification Regime (SM&CR)

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Responses are requested by October 7, 2025.

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Responses can be sent by email to: CP18_25@bankofengland.co.uk.

Alternatively, please address any comments or enquiries to:
Governance Remuneration and Controls Team
Prudential Regulation Authority
20 Moorgate
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EC2R 6DA

1: Overview

1.1 Ensuring that the most senior decision-makers in financial services firms are accountable for their actions underpins sound risk management. The Prudential Regulation Authority (PRA) uses the Senior Managers and Certification Regime (SM&CR) to ensure that the right people are identified as senior decision-makers and that these individuals are clear as to their responsibilities. The regime is widely regarded as having improved the safety and soundness of United Kingdom financial services firms and the wider financial system, and has been emulated in a number of countries in recent years.

1.2 This consultation paper (CP) sets out initial proposed changes to the PRA’s SM&CR rules and expectations within the context of the current legislative framework. HM Treasury (HMT) is responsible for the SM&CR’s statutory basis, while the Financial Conduct Authority (FCA) and PRA are responsible for making it operational through rules and policy. The proposals set out in this CP represent potential enhancements that can be taken forward by changes to PRA rules, expectations and the provision of additional information without changes to legislation. These Phase 1 proposals, while continuing to support safety and soundness, will make the regime less burdensome and more flexible, enhancing the competitiveness and growth of the United Kingdom, by lowering compliance costs and supporting the flow of international talent to the UK. That in turn can help enhance the UK’s position as a world-leading global finance centre and location for financial services activity.

1.3 This CP is relevant to all PRA-authorised firms and all persons to which the Change in Control part, Financial Services and Markets Act 2000 (FSMA), applies. It is also relevant to firms seeking to apply for PRA authorisation as it identifies circumstances in which a controller may also need to be approved an SMF holder.

1.4 HMT has announced on 15 July 2025 that it is separately consulting on potential legislative changes to the SM&CR regime. If adopted, new legislation could provide the PRA with much greater flexibility to improve the operation of the SM&CR. The PRA welcomes HMT’s decision to consult on legislative changes to the regime – in particular on proposals that would allow for a reduction in the number of Senior Manager determinations made by the regulators and the removal of the Certification Regime from FSMA. The PRA will consider consulting as part of a ‘Phase 2’ of reforms on proposals to take advantage of any additional flexibility arising from HMT’s proposals, including which Senior Manager roles might be removed from the requirement to seek regulator pre-approval prior to appointment. While the details of the PRA’s proposed approach will be set out separately, we would expect it to deliver a further, significant reduction in regulatory burden while continuing to support the overall objectives of the SM&CR and firms’ safety and soundness. In addition, the FCA is publishing its consultation paper on the SM&CR.

1.5 The specific proposals in this CP have been prompted by PRA experience of the operation of the regime in recent years and responses from industry to discussion paper (DP) 1/23 – Review of the Senior Managers and Certification Regime (SM&CR). The proposals principally relate to Senior Managers, who hold Senior Management Functions (SMFs) reflecting their key role in directing the management of a firm. The proposals seek to make the process for onboarding new SMFs more efficient, help firms navigate the regime more easily, and ensure that those individuals who should be accountable for key decisions are clearly identified. The changes also complement recently proposed amendments to the remuneration regime, which are also aimed at reducing unnecessary burden on firms and individuals.

1.6 The proposals will complement recent improvements to the PRA’s internal processes for determining the fitness and propriety of Senior Managers. Over the past year, the PRA has introduced changes to internal operating procedures for processing SMF applications and plans to make further enhancements in the future. These changes have already delivered greater proportionality and efficiency in how the regime operates and will help sustain the high operational effectiveness. While these operational changes are not being consulted on as part of this CP given that they are internal to the PRA, they are an important part of the PRA’s actions in relation to industry responses and provide context to the policy proposals outlined below.

1.7 The PRA recognises that respondents to this CP may wish to comment on HMT’s proposals and potential implications for Phase 2 reforms, as well on the specific Phase 1 proposals in this CP. The PRA welcomes such feedback.

Background

1.8 The SM&CR was first introduced in 2016 in response to the recommendations of the Parliamentary Commission on Banking Standards, considering significant governance failings that emerged during the global financial crisis. The key features of the regime are set out in FSMA and made operational through PRA and FCA rules and policy documents.

1.9 The December 2022 Edinburgh Reforms included an initiative for HMT, the FCA and the PRA to commence reviews of the SM&CR drawing on experience of the operation of the regime. Consequently, HMT issued a call for evidence in March 2023 on the legislative framework underpinning the regime. Alongside this, the FCA and the PRA (together ‘the regulators’) published DP 1/23 – Review of the Senior Managers and Certification Regime (SM&CR) to encourage responses from stakeholders on how the SM&CR has been made operational by the regulators.

1.10 The regulators jointly received 140 responses to the DP, with over 90 relevant to the work of the PRA. Stakeholders highlighted the importance of the SM&CR in enhancing prudential standards. Most respondents (88%) agreed the regime made it easier to hold individuals to account. Alongside this, 82% felt individual accountability supported safety and soundness and conduct, while 75% agreed that fitness and propriety (F&P) requirements supported the appointment of qualified individuals to SMFs.

1.11 Respondents also highlighted areas for improvement. A clear message was that many stakeholders were concerned about delays in regulatory determinations of SMF applications between 2021 and 2023. As noted above, operational changes have since delivered significant improvements in SMF determination timelines. Respondents also saw scope to streamline elements of the regime and felt its effectiveness and efficiency could be enhanced through targeted changes. Similar responses were received at industry roundtables organised by HMT during the consultation period.

1.12 Consequently, this CP sets out targeted Phase 1 policy proposals that support safety and soundness while enhancing the flexibility, clarity and efficiency of the regime. These proposals complement recent and planned operational changes in respect of SMF determinations.

Structure of the CP

1.13 The CP is structured as follows:

• Chapter 2 sets out proposals relating to the regulatory determination of SMF applications, centring on changes to the ‘12-week rule’.^{footnote [1]} The chapter additionally provides important contextual information relevant to PRA fitness and propriety assessments.
• Chapter 3 sets out proposals relating to who is within scope of the Senior Managers Regime, including the Group Entity (SMF7) function. It also explains proposals to exclude appointments in relation to the resolution or stabilisation of a deposit-taker.
• Chapter 4 covers the application and ongoing operation of different components of the SM&CR. This includes clarificatory proposals relating to Statements of Responsibilities (SoRs), Management Responsibilities Maps (MRMs), Criminal Record Checks and the Certification Regime, as well as improvements to notification requirements for senior individuals working in insurers, known as Key Function Holders.^{footnote [2]} The chapter also responds to stakeholder responses received on the Conduct Rules, what is meant by ‘reasonable steps’, and regulatory references.^{footnote [3]}
• Chapter 5 sets out proposals to enhance firms’ ability to navigate the SM&CR. These include increasing visibility of the inventory of Senior Manager responsibilities and the creation of a specific Policy Index for the SM&CR to be added to the Bank of England’s website. The chapter also proposes the removal of references to certain EU policy materials, redundant references to the Approved Persons Regime and gendered language from SS28/15 – Strengthening individual accountability in banking and SS35/15 – Strengthening individual accountability in insurance.

1.14 The policy proposals in this CP would result in changes to the following parts of the PRA Rulebook:

• The Glossary;
• Capital Requirements Regulation (CRR) Firms and Non-CRR Firms – Allocation of Responsibilities;
• CRR Firms and Non-CRR Firms – Certification;
• CRR Firms; Non-CRR Firms; Solvency II, Non-Solvency II Firms; Change in Control;
• CRR Firms and Non-CRR Firms – Conduct Rules; Solvency II – Insurance – Conduct Standards; Large Non-Solvency II Firms – Conduct Standards and Non-Solvency II Firms – Conduct Standards; and
• CRR Firms and Non-CRR Firms – Senior Management Functions; Solvency II – Insurance – Senior Management Functions; Large Non-Solvency II Firms – Senior Management Functions and Non-Solvency II Firms – Senior Management Functions.

1.15 The proposals would also result in changes to SS28/15 – Strengthening individual accountability in banking, SS35/15 – Strengthening individual accountability in insurance, and SS5/21 – International banks: The PRA’s approach to branch and subsidiary supervision.

1.16 The PRA has a statutory duty to consult when changing rules (FSMA s138J), or new standards instruments (FSMA s138S). When not making rules, the PRA has a public law duty to consult widely where it would be fair to do so.

1.17 In carrying out its policymaking functions, the PRA is required to comply with several legal obligations. The analysis in this CP explains how the proposals have had regard to the most significant matters, including an explanation of the ways in which having regard to these matters has affected the proposals.

1.18 The PRA’s Cost Benefit Analysis (CBA) Panel was not consulted on the CBA as the direct impact of the initial package on PRA firms is expected to be below the +/-£10 million materiality threshold as stated in a statement of policy published on 12 December 2024. CBA analysis can be found in Chapter 6. The Practitioner Panel was consulted on a number of proposals in this CP in 2024.

Implementation

1.19 The PRA proposes that the implementation date for the changes resulting from this CP would likely be mid-2026.

Responses and next steps

1.20 This consultation closes on 7 October 2025. The PRA invites responses on the proposals set out in this consultation. Please address any comments or enquiries to [CP18_25@bankofengland.co.uk].

1.21 When providing your response, please tell us whether or not you consent to the PRA publishing your name, and/or the name of your organisation, as a respondent to this CP. Responses to this CP may be shared with the Bank of England and the Financial Conduct Authority (FCA). Responses may also be shared with HMT. This may include your name, contact details (including, if provided, details of the organisation you work for), and opinions or details offered in the response itself. The response will be used to inform the PRA’s and FCA’s work as regulators, and the Bank of England as central bank, both in the public interest and in the exercise of official authority. We may use your details to contact you to clarify any aspects of your response.

1.22 Please also indicate in your response if you believe any of the proposals in this CP are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be.

1.23 References related to the UK’s membership of the EU in SS28/15 and SS35/15 have been updated as part of these proposals to reflect the UK’s withdrawal from the EU. Unless otherwise stated, any remaining references to EU refer to the version of that legislation which forms part of assimilated law.

2: Senior Manager approval process

SMF approvals, industry responses and process enhancements

2.1 DP1/23 asked three specific questions regarding the SMF approval process: how the process could be further improved; whether the process for obtaining criminal records was effective in supporting the aims of the SM&CR; and whether the 12-week rule provided sufficient flexibility for firms to manage changes in SMF holders. It also asked two broader questions which provided stakeholders further opportunity to comment on the approval process: whether the scope of the SM&CR was appropriate; and what actions the regulators could take to enhance competition and international competitiveness.

2.2 It was clear that a key priority for respondents was addressing delays in the regulatory process for reviewing SMF applications. They suggested that processes could be enhanced, and applications processed faster. Several respondents suggested that delays affected competitiveness and the ability to attract, hire and retain talent; and that a more proportionate approach to approvals could be adopted in cases where applicants already possessed relevant professional experience. Some respondents proposed solutions to improve or reduce assessment timelines. One suggestion was to divide the current set of SMFs into two sets: a first set where applicants would be subject to regulatory pre-approval following current processes, and a second set of SMFs requiring a notification to the regulators. 2.3 The PRA is working with industry to ensure that the SMF application and determination process is transparent and efficient. The regulators have resolved the application backlog that arose between 2021 and 2023 through increased resourcing and by making operational improvements. The latest PRA figures show that in the period March-May 2025 100% of SMF applications were determined within the three-month target.2.4 The PRA is focused on sustaining the improved efficiency with which it makes SMF determinations, recognising the importance to firms’ ability to attract talented individuals and onboard them into senior roles in supporting the vibrancy of the financial services sector. It has established a programme of internal improvement and review that will not only help to avoid the recurrence of past SMF assessment backlogs but also ensure more timely feedback on applications and earlier decisions. Some changes have already been embedded, including additional training for staff responsible for assessments and removing duplication of activity with the FCA, given that applications are shared between the regulators. 2.5 The PRA is also looking to make further changes to its operations to ensure greater proportionality and consistency, including reviewing its interview processes and decision-making framework. Planned industry engagement (as set out below) should in turn provide greater transparency of the PRA’s approach and help reduce uncertainty for applicant firms and individuals. 2.6 The PRA will ensure that appropriate determinations continue to be undertaken, as efficiently as possible, for each SMF application in keeping with the current FSMA requirement that all SMF holders are assessed by the PRA as fit and proper persons in relation to the SMF they hold. However, if adopted, new legislation could provide the PRA with much greater flexibility in considering further how to improve the operation of the SM&CR. A subsequent Phase 2 consultation might then enable the regulators to define which roles require pre-approval, and those on which the PRA could rely on firms’ assessment of candidates’ fitness and propriety.

12-week rule

2.7 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 12-month period, only if their firm has an SMF vacancy that is (a) temporary or (b) reasonably unforeseen. Most DP respondents commented that the 12-week rule offered insufficient flexibility to firms when recruiting new SMF holders. Respondents suggested that the rule could be modified by, for example, extending it to 6-months (ie 26 weeks); and/or by requiring that a complete application need only be submitted within 12 weeks instead of a decision having been made on an application in that period. It was also suggested that individuals not approved as an SMF holder (eg where someone is performing a role under the 12-week rule) should be able to hold the Prescribed Responsibilities (PRs) associated with such roles.

2.8 The PRA considers that firms should ensure they have appropriate notice periods in place for SMFs as well as clear succession plans that reflect current and future business needs. At the same time, the PRA recognises that the recruitment process for appropriately qualified SMF candidates requires appropriate time and diligence, particularly when departures are unanticipated.

2.9 Having considered the responses on timing, the PRA proposes to amend the rule so that firms must submit a complete SMF application within 12 weeks of the unforeseen departure or temporary absence of the current SMF holder, rather than requiring that the full approval process (including regulatory approval) is completed within 12 weeks. Regulators would then have a further (statutory) three months to review and take a decision on the application. An individual may continue acting in role until the outcome of the application is determined. This provides firms more time to identify an appropriate individual and greater certainty in the composition of their management team, where an application is made within 12 weeks, but approval remains pending after that deadline.

2.10 Where a firm decides to initiate a recruitment process for a permanent appointee which takes longer than 12 weeks, it will need to apply for approval of an interim candidate until a permanent candidate is identified.

2.11 The PRA further proposes to apply the Senior Manager Conduct Rules to individuals operating under the 12-week rule. At present, while the Individual Conduct Rules apply to individuals operating under the 12-week rule, the Senior Manager Conduct Rules do not.^{footnote [4]} Applying the Senior Manager Conduct Rules to any individual holding the role under the 12-week rule, whether already an SMF holder or not, will support accountability by ensuring that those who are appointed to new roles where they are able to take key operational decisions in respect of a firm have to meet these additional, higher conduct standards.

2.12 On scope, the PRA believes that the 12-week rule is not appropriate for longer foreseen absences given its expectations on succession planning. The PRA therefore does not propose to amend the circumstances set out in the scope of the rule and considers that it should continue to apply only for temporary absences or reasonably unforeseen departures.

2.13 To improve clarity on the use of the rule, the PRA proposes to add non-exhaustive examples in SS28/15 and SS35/15 regarding the circumstances in which the rule can be used in a new section titled ‘operation of the 12-week rule’.

2.14. Section 62A of FSMA requires firms to submit a revised Statement of Responsibility (SoR) whenever there is a significant change in the firm’s affairs which the SMF holder is responsible for managing as part of their SMF approval. Under the proposed approach to the 12-week rule, the PRA will not expect firms to submit updated SoRs to the regulator until an absence has reached 12 weeks.^{footnote [5]} If the absent SMF holder returns within 12 weeks this means no updated SoRs would need to be submitted (though the firm would still in the meantime need to reallocate the Prescribed Responsibilities (PR) and make changes to SoRs and MRMs for internal purposes).

2.15 The PRA will monitor usage of the rule to ensure the rule is not being over-used or used incorrectly.

2.16 The PRA believes that the changes proposed will deliver enhanced flexibility and responsiveness, while supporting good standards of governance and accountability.

Clarifications on fitness and propriety tests

2.17 Some respondents to DP 1/23 suggested that the regulators should place greater reliance on approval processes regarding someone having been approved in another jurisdiction or similar accountability regime. Respondents also called for the regulators to place greater reliance on someone having been approved previously as an SMF in another regulated firm, suggesting this could speed up SMF assessments, with several respondents calling for fast-tracking of SMF applications on this basis.

2.18 As noted in DP 1/23, in assessing applications, previous professional experience in financial services in a similar role is indeed often highly relevant, whether gained within the UK or internationally. Such experience already contributes to evidence of fitness and propriety and informs PRA judgements of whether to request further information or a candidate interview. At the same time, it does not provide an automatic ‘fast track’ to approval as each assessment is role specific.

2.19 The PRA proposes to clarify this by adding additional text to SS28/15, paragraph 4.6 and SS35/15 paragraph 4.2, and to underline this point in its communications with firms and stakeholders. This clarification will give firms and candidates a better understanding of and clarity about the SMF determination process, supporting UK firms’ ability to attract talent from the UK and abroad.

Industry engagement on the SM&CR approval process

2.20 Stakeholders have continued to highlight their interest in improved and more regular engagement with the regulators on Senior Manager determinations. Responses to the DP and discussions with trade bodies suggest that the industry is interpreting specific expectations and requirements inconsistently and would benefit from revised, streamlined guidance to avoid unnecessary costs.

2.21 To address these concerns, the PRA proposes to continue its engagement with industry to understand challenges and trends with regards to SMF application submissions and, alongside the FCA, will work with trade bodies to help improve understanding of requirements and expectations. This engagement takes place through various channels, including seminars, firm feedback opportunities post SMF determinations, and updates to PRA webpages. It included a PRA seminar on ‘How to submit high quality SMF applications’ held in October 2024 and the PRA participated at the Association for Financial Markets in Europe (AFME) panel on Governance and Accountability in September 2024. On 2 July 2025 the PRA also hosted a webinar covering our approach to assessing international candidates. It is intended that such communication and engagement can help clarify the determination process for firms and prospective candidates, supporting making the UK a more attractive place to do business.

3: Individuals in scope of the Senior Managers Regime

3.1 Under the SM&CR, key roles are defined as SMFs (eg Chief Executive (SMF1), Chief Finance (SMF2) and Chair of the Governing Body (SMF9)), and must be assigned to one or more individuals, termed Senior Managers. This seeks to ensure that all key decision-makers within a firm are individually accountable for their decisions. It is important that the individual(s) performing an SMF should be the most senior person(s) responsible for that area of the firm and that SMF functions are not delegated to those occupying more junior positions. In the event of legislative change, a Phase 2 consultation on the SM&CR could provide an opportunity to consider the current framework for defining and assigning SMFs. In the meantime, this CP makes only specific proposals in respect of the SMF7 role and the approach to resolution administrators.

Group Entity Senior Manager (SMF7)

3.2 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 which is a member of the firm’s group.

3.3 Respondents to the DP and participants in roundtable discussions during the feedback period asked for additional clarity as to when the PRA considers someone is in-scope of the SMF7 definition and requested worked examples of the types of roles carried out by individuals that could be in scope of an SMF7 role holder.

Guidance

3.4 The PRA has considered the responses received and reviewed its existing guidance in SS28/15 and SS35/15. While the SMF7 scope is broad to address a variety of business models and governance arrangements, the PRA agrees that there are benefits in providing further guidance. The guidance will ensure that this function is applied consistently and appropriately to those key decision makers in scope.

3.5 The PRA is therefore proposing revisions to SS28/15, SS35/15 and SS5/21 to give firms more clarity as to who is in scope of the SMF7 designation and the associated requirements arising from the Senior Managers Regime. These include illustrative examples that cover where the PRA would, or would not, ordinarily expect someone’s role to be likely to be identified as an SMF7. This is intended to enhance understanding of how the SMF7 should be applied. The SMF7 examples in SS28/15 and SS35/15 should not be interpreted as being an exhaustive list of roles that are in scope of the SMF7. Firms should not regard someone who exercises significant influence over a PRA-authorised firm’s decision making as outside the scope of SMF7 solely because their role is not included in those examples. The PRA's guidance continues to make clear that the question of whether someone meets the PRA Rulebook definition of SMF7 will be judged on a case-by-case basis. The changes to SS5/21 are consequential and aim at avoiding duplication or confusion.

3.6 The PRA also proposes to clarify the responsibility for identifying individuals who require approval as an SMF7. To this end, the new paragraphs 2.16B and 2.16C of SS28/15 and paragraphs 2.13B and 2.13C of SS35/15 explain that, in the first instance, it is for firms to consider if there are individuals performing an SMF7 role as defined by PRA rules and the scenarios provided in the new text. These paragraphs should be read in conjunction with Section 59 FSMA which requires firms to take reasonable care to ensure that regulatory approval is sought for someone who performs an SMF specified in PRA rules. However, where a firm has not identified such an individual and the PRA considers that there is an individual who meets the description of an SMF7, and informs the firm accordingly, the firm should make an application without delay.

3.7 The PRA anticipates that the new paragraphs 2.16B and 2.16C of SS28/15 and paragraphs 2.13B and 2.13C of SS35/15 will enable firms to understand better the intended scope of the function and therefore identify where an SMF7 application must be made.

Extending SMF7 to controllers

3.8 The current definition of SMF7 includes individuals that may not be directly employed by a PRA-authorised firm but are employed elsewhere within the group and have significant influence on the management or conduct of one or more aspects of the firm’s affairs in relation to its regulated activities. This aligns with a principle on which the SM&CR is based, that there should be appropriate accountability for individuals who are capable of acting as key decision-makers.

3.9 Various individuals based in group entities, who perform key decision-making roles in both UK and internationally headquartered groups, have been designated as SMF7 holders. At the same time, the PRA has also observed limitations with the current definition. In particular, the PRA has observed situations where individuals have significant influence over a PRA-authorised firm’s management and decision making but, as they are not employed by group entity, do not fall within the current SMF7 definition. This includes situations where a firm’s controller (as defined in section 422 FSMA)^{footnote [6]} exercises or plans to exercise significant influence over the decision making and day-to-day management of a firm on matters that have the potential to affect the firm's safety and soundness. Consistent with the intent of the Senior Managers Regime, the PRA proposes that such individuals should be brought within the scope of the regime.

3.10 The PRA recognises that controllers, and their representatives, add value by sharing their knowledge, skills, and experience and by contributing to strategy setting and management oversight, including as non-executive members of firms’ boards. In line with the current definition of the SMF7, where such individuals also have the potential to affect the safety and soundness of a firm through significant influence over executive decision-making or day-to-day management, the PRA considers it reasonable that this should come with an appropriate level of accountability. The PRA therefore proposes to amend the SMF7 definition to bring in scope those controllers, and their representatives, who apply significant influence over the day-to-day management or conduct of the firm’s affairs in relation to its regulated activities, regardless of the legal structure of the group.

3.11 The PRA expects that only a relatively small number of existing or future controllers (or their representatives) will require SMF7 approval by virtue of their role and behaviour in respect of a PRA-authorised firm. The PRA expects individuals would only be in-scope where they have (or plan to have) a continued and sustained involvement in the day-to-day management or conduct of business of a PRA-authorised firm. The PRA would not, for example, expect an individual to be an SMF7 where their influence is restricted to operating as a non-executive director in line with the PRA’s requirements and expectations for boards and non-executive directors. Investors could therefore be represented on a PRA-authorised firm’s board as notified non-executive directors without becoming an SMF7.

3.12 This approach is in line with the principles set out in the PRA’s recent SS 10/24 – Prudential assessment of acquisitions and increases in control on the assessment of acquisitions and increases in control. Under s186 of FSMA, controllers are already required to obtain PRA approval and the PRA must assess those who will direct the business. Therefore, in situations where the change in control will result in the identification of one or more SMF7s, these cases could be processed in conjunction with the change in control assessment and should not have a detrimental impact on the assessment timeline. If a person has been approved as a controller but does not fall within the proposed revision to the scope of an SMF7 at the time of an s178 notification of a change in control, this individual will not need to be approved as an SMF7. But depending on controllers’ and representatives’ subsequent involvement in a firm’s affairs, they may be required to apply to be approved as SMF7 at a later point in time. The PRA’s assessments in respect of controllers and SMF7 are compatible and can be conducted in parallel.

Resolution administrators

3.13 Insolvency practitioners undertaking the administration and winding up of a regulated firm are exempt from the requirements of the SM&CR, though subject to statutory requirements in undertaking their duties. The PRA has considered whether a resolution administrator, 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, should also be exempted.

3.14 The rationale for an exemption would be that those conducting such roles are seeking to stabilise a situation which, if not addressed, could have significant adverse implications for the PRA’s safety and soundness objective in circumstances where markets may be volatile. Moreover, those holding such roles are subject to a statutory appointment process (under the Banking Act 2009) where the terms of such appointments are covered by that statute and documented in the formal appointment instruments, governed by public law. Given the threat to its safety and soundness objective presented by a disorderly resolution, the PRA recognises there is a strong case for exempting resolution administrators to facilitate their appointment. It is also likely that the number of individuals able to perform such roles is limited in number and individuals may need to be selected in circumstances where confidentiality is essential. A similar rationale would apply to exempt directors or Senior Managers of a bridge bank and asset management vehicle as these are analogous roles to the resolution administrator using similar stabilisation powers under the Banking Act 2009.

3.15 The PRA therefore proposes that the following resolution-related roles should be exempt from the SM&CR:

• resolution administrators appointed by the Bank of England pursuant to section 62B of the Banking Act 2009;
• a director, or Senior Manager, of a bank or building society, or another stabilisation vehicle (ie a bridge bank or an asset management vehicle), appointed by the Bank of England pursuant to the Banking Act 2009; and
• a director, or Senior Manager, of a bank or building society appointed by HMT following the exercise of the temporary public ownership stabilisation power pursuant to the Banking Act 2009 for a period of up to two years.

3.16 It is further proposed that the exemption would exist for the term of the appointment in the case of Bank-appointed resolution officials; and for a period of up to two years for directors appointed by HMT at a bank or building society subject to temporary public ownership.

3.17 It is also proposed that individuals exempted in this way would not be subject to the Senior Manager Conduct Rules, but the Individual Conduct Rules would continue to apply.

4: The application and ongoing operation of the Senior Managers & Certification Regime

Statements of Responsibilities (SoRs) and Management Responsibilities Maps (MRMs)

4.1 Overall, most respondents to DP1/23 were positive about the way that SoRs and MRMs assist firms in identifying individual responsibilities and reporting lines. That said, respondents also raised concerns about the administrative burden involved in re-submitting SoRs and MRMs each time there is a significant change. Some firms asked for more guidance on how to format SoRs and MRMs, while others preferred to exercise judgement on this question. A small number of firms thought SoRs and MRMs were duplicative, and that there was a case for providing one document or the other. Some respondents to DP1/23 also suggested that SoRs and MRMs should be kept up-to-date internally but need only to be submitted to the regulators on a periodic basis (either quarterly or annually), or that they could be provided to the regulators on request.

4.2 As it regards formatting, the PRA reminds firms that the template for SoRs is available at Senior Managers Regime: approvals. In terms of whether the forms are duplicative, SoRs and MRMs serve distinct functions, as the former relate to the key responsibilities of individual SMF holders, whereas the latter look more broadly at management structures and reporting lines within a firm. The PRA believes it is important to maintain these documents as distinct and separate.

4.3 With regards to the frequency of submitting SoRs, s62A of FSMA requires firms to provide an updated SoR if there has been any significant change in the responsibilities of a SMF holder. However, Section 62A of FSMA does not, however, state a timeframe for providing a revised SoR.

4.4 In light of this statutory provision and the responses received, the PRA proposes in Phase 1 to amend SS28/15 (paragraph 2.54) and SS35/15 (paragraph 2.86) to set an expectation that the submission of the updated SoR should happen no later than six months following a significant change in responsibilities. This timeframe does not apply in cases where the firm has been notified of the need for earlier submission by its supervisor; or where the revised 12-week rule is being utilised (see paragraph 2.14 above); or where earlier submission is required to comply with Fundamental Rule 7 (eg a significant and wide reallocation of responsibilities across the firm’s Senior Managers). Phase 2 may offer further opportunities to review the regulatory approach to SoRs.

Firms are reminded that SoRs are 'living documents’ and as such firms should amend SoRs internally as soon as significant changes in Senior Manager responsibilities occur and not delay updating the documents until the submission is due.

4.5 The PRA proposes taking a similar approach for MRMs by setting an expectation in SS28/15 (paragraph 2.58) and SS35/15 (paragraph 2.91) that such documents should be submitted no later than six months following a significant change in the set of management responsibilities. Again, this should not be the case if the firm has been notified of the need for earlier submission by its supervisor; or earlier submission is required in order to comply with Fundamental Rule 7 (eg a broad and significant restructuring of management responsibilities within the firm); or if MRM is provided alongside an SoR pursuant to the 12-week rule. MRMs are 'living documents’ and as part of its proposed expectation the PRA notes that firms should amend MRMs internally as significant changes in Senior Manager responsibilities occur and not delay this until the document is due to be submitted.

Prescribed Responsibilities (PRs)

4.6 Some respondents to the DP suggested that the number of PRs might be reduced or amalgamated. Having considered this question, the PRA has decided not to propose a reduction, nor consolidation in the number of PRs as part of its Phase 1 changes. The PRA recognises that there are various PRs that must be assigned to one or more SMF holder, and which are additional to the inherent responsibilities that attach to a particular SMF. In the case of CRR firms and Solvency II insurers there are, for example, four PRs that cover aspects of the SM&CR.^{footnote [7]} Firms that wish to assign several PRs to one Senior Manager are able to do so; at the same time, firms can exercise a degree of choice in assigning PRs to different SMF holders if they feel this is appropriate in the context of their corporate structure.

4.7 Some stakeholders asked whether greater proportionality could be embedded in the SM&CR. In that regard, the PRA has considered if there is merit in increasing the threshold at which a deposit taker would become a small firm for the purposes of the SM&CR, and the threshold for being a small non-directive insurer. In both cases, firms below the relevant threshold need to apply a smaller number of PRs. On balance, the PRA has decided not to propose increasing the threshold for the following reasons. Firstly, while firms below the relevant threshold have fewer PRs these are typically broader responsibilities. In such cases, Senior Managers at a firm coming into scope of the small firm regime would still need to cover the broad set of risks facing the firm, and may feel such a change conferred limited benefit. Second, the need for an appropriate culture, including risk culture, is viewed as increasingly important, and raising the small firm threshold would result in fewer firms needing to assign the PRs relating to the culture of the firm. Thirdly, it was not evident there was sufficient interest on the part of firms generally to justify the administrative costs for firms and the PRA of such changes.

4.8 Phase 2 work may, however, present an opportunity to review the position in relation to PRs more broadly.

Regulatory References

4.9 Responses to DP1/23 showed that respondents were supportive of the role that regulatory references play in assisting firms in conducting fitness and propriety assessments of senior persons. Regulatory references are mandatory employment references that firms must exchange when hiring SMF holders or certified persons. They help to ensure that instances of misconduct that have occurred during an individual’s previous employment are visible to a hiring firm, and therefore lessen information asymmetries during the hiring process.

4.10 The PRA notes that several respondents to DP1/23 asked for further guidance on additional information that might be included in a regulatory reference in relation to misconduct investigations. In response the PRA proposes amending SS28/15 (paragraph 6.41) and SS35/15 (paragraph 5.41) to clarify that where an internal investigation into misconduct relevant to the assessment of fitness and propriety was commenced but disciplinary procedures were not concluded because the individual left the firm, firms should consider whether or not to include details of this in the reference.

4.11 The FCA proposes reducing the window for responding to a regulatory reference to four weeks, but the PRA is not proposing to set such a period. The PRA recognises that a deadline for submission would assist firms in on-boarding SMF holders but would also reduce the time available to those preparing references.

4.12 Looking ahead, changes to the Certification Regime that may arise as part of Phase 2 could lead to a reduction in the number of roles where firms must seek a regulatory reference as part of the hiring process.

Criminal Record Checks

4.13 Many respondents to DP1/23 felt the existing requirement and process for obtaining criminal records checks is effective and supports firms’ on-boarding and recruitment. Respondents to the DP suggested that firms would benefit from an extension to the validity period of the checks, however respondents were broadly silent on a preferred duration of the extension. Currently this period is up to three months prior to application submission. A small number of respondents suggested waiving such requirements for individuals changing SMF roles within the same group, whether in the United Kingdom or wider. There were also requests for clarification on the requirement for undertaking new checks when an individual is moving roles in the same regulated entity (via a Form E submission, for example) regardless of being a new SMF or not.

4.14 The PRA has considered the responses received. While the PRA does not anticipate that many firms will require additional flexibility and expects firms to conduct all checks to determine fitness and propriety of their candidates in a timely manner, it appreciates that in certain circumstances, additional time may be required. Across the United Kingdom, criminal record checks are carried out by the Disclosure and Barring Service/Disclosure Scotland/Access NI and so are out of firms’ control. Any delays to processing may impact on the firm’s ability to carry out a check.

4.15 The PRA therefore proposes to amend relevant application forms, including ‘Form A’, to extend the period for requiring a check to be undertaken from up to three months to up to six months prior to an application submission. Under existing rules, a Form E submission does not require a criminal records check to be completed providing the firm is up to date with their annual F&P cycle.^{footnote [8]}

4.16 As outlined in the PRA SMF application forms, when submitted, both the firm and the applicant must declare that all relevant information is fully disclosed. If an offence was committed but was not reflected in the Criminal Records Check because of the specific timings involved, the applicant must still declare this as part of the application submission.

4.17 The PRA also received feedback that the criminal record check process required for non-SMF holders, such as non-executive directors and Key Function Holders, who submit Form M notifications, is not clear. The PRA propose to amend SS28/15 (paragraph 4.19) and SS35/15 (paragraph 4.12) to clarify that for those who are non-SMF holders, the PRA expects a firm to obtain a Criminal Records Check (with the consent of the candidate). The firm should request all necessary information in relation to the candidate as it is lawfully able to. It is expected that any relevant detail which could impact a candidate’s fitness and propriety, be disclosed in the submission form(s).

Conduct Rules and Reasonable Steps

4.18 A number of respondents agreed that the Conduct Rules have provided a means of promoting higher standards. However, some dual regulated firms asked for more clarity on the criteria for determining a conduct breach. Section 64C of FSMA already requires that regulators are to be notified where ‘disciplinary action’ has been taken against an individual defined as: a formal written warning; a suspension or dismissal; or the reduction of a person's pay. Incidents that prompt such actions are context specific, and it is difficult to list all the circumstances that would result in a conduct breach.

4.19 Several respondents called for more guidance on the definition of ‘reasonable steps’ under the Senior Manager Conduct Rules to ensure consistency of their application, given what they referred to as the relatively modest number of enforcement notices that exist. At the same time, there were concerns that more detailed official guidance would result in greater prescription in terms of internal HR policies. The current SS28/15 contains analysis on the PRA’s approach to the Reasonable Steps criterion and the duty of responsibility. Any assessment of the reasonable steps a Senior Manager could, or should, have taken will be fact and case specific. The PRA is not proposing therefore to make additions to existing guidance.

Certification Regime

4.20 As part of its announcements, HMT has committed to consult on removing the current provisions of the Certification Regime in legislation. The requirement to assess all certified persons as fit and proper at least annually is set out in legislation (s63E(1), s63F(1) and s63F(5)of FSMA) so cannot be amended by the PRA. But to help firms in the interim, ahead of potential legislative changes and to streamline requirements now, we propose to clarify the PRA’s expectations regarding firms’ annual certification assessment.

4.21 DP1/23 asked to what extent respondents agreed or disagreed that the Certification Regime is effective in ensuring that individuals within the regime are fit and proper for their roles. While the majority of firms agreed, respondents highlighted how the regime could be made more proportionate. Various respondents suggested reducing the frequency with which firms are required to issue certificates to certified employees and, therefore, conduct the associated fitness and propriety assessments on such individuals.

4.22 Some respondents also questioned the value added by the Certification Regime and believed that firms’ existing internal processes would already enable firms to identify whether staff in certified roles are fit and proper.

4.23 The PRA recognises that ahead of any future legislative change that may occur, it may assist firms if SS28/15 and SS35/15 were updated to clarify that while there is a requirement to undertake at least an annual assessment:

• the PRA does not set expectations regarding the form of any certificate issued nor the specific procedures to be applied by a firm when issuing or renewing a certificate;
• when issuing a certificate, firms can build on or use various internal systems, procedures, and processes available to them but as a minimum it must be recorded and made clear:
  • that the firm is satisfied that the person is fit and proper to perform the function to which the certificate relates; and
  • the aspects of the affairs of the firm the person will be involved in when performing the function.
• firms must allocate the PR for the firm’s performance of its obligations under the Certification Regime (PR B) to an accountable SMF holder.

4.24 The PRA considers that these proposed additions to SS28/15 (paragraphs 3.13 – 3.15) and SS35/15 (paragraph 2A.12 – 2A.14) should clarify that firms have discretion when developing procedures, while ensuring they comply with the regulatory requirement that certified staff continue to be fit and proper persons. Such clarifications should assist firms in applying an efficient process for certification near-term without presuming the outcome of any Phase 2 consultations.

Key Function Holders and notifications

4.25 The PRA received responses to DP1/23 that noted a potential duplication and uncertainty in Key Function Holders (KFH) regulatory notifications, and submissions required by the PRA.^{footnote [9]} For example:

• The PRA Rulebook requires that where an individual who is a KFH is to be approved by the PRA to perform an SMF, the firm must provide information specified in Form M and required for the PRA SMF role, together with a SoR.^{footnote [10]} The PRA recognises that this situation may arise where the mandatory KFHs of Risk Management, Compliance, Internal Audit and Actuarial meet the definition of an equivalent SMF (SMF4, SMF16, SMF5 and SMF20 respectively). Any individual applying to perform an SMF must submit the relevant Form (A/E) alongside a SOR. A KFH is required to submit a form M. However, where an individual will be both an SMF holder and a KFH, only Form A/E will be required.
• If a KFH also holds an FCA controlled function, the firm does not need to submit a KFH notification form to the PRA to the extent that it has provided the information to the FCA.

4.26 The PRA proposes to clarify its expectations in SS35/15 (paragraph 2.69) that the SMF responsible for the identified key function(s) only would be required to submit the SMF application form and accompanying material. In this case, firms are not expected to submit a Form M notification in addition to an SMF application, which helps reduce their administrative burden.

5: Navigating the SM&CR

Inventory of Senior Manager responsibilities

5.1 A number of respondents noted that the SM&CR is based on several component parts, and that it would assist stakeholders if the PRA took steps to ensure the relevant rules, expectations and guidance underpinning the regime were presented more clearly and made easier to navigate. To that end, it was suggested that available guidance, such as the inventory of responsibilities, could be included in SS28/15 (paragraph 2.47I) and SS35/15 (paragraph 2.46A).

5.2 The PRA has considered these responses. The proposals below seek to make existing guidance more navigable and reduce the compliance burden on firms:

• creation of an SM&CR policy index that would be broken down into the most prominent regime components and a precise description of where the relevant information can be found (eg paragraph numbers of the relevant Supervisory Statement, rulebook section, paragraph numbers of Statements of Policy);
• renaming of the ‘Key policy’ section on the ‘Strengthening accountability’ page into ‘SM&CR and governance key policy resources’ section and link:
  • the Prudential and Resolution Policy Index;
  • the SM&CR policy index; and
  • the SM&CR inventory (that is currently published under ‘Latest strengthening accountability updates’);
• inclusion of a link to the ‘Strengthening accountability’ page in SS28/15 and SS35/15; and
• inclusion of a reference to the SM&CR inventory that is currently published on the ‘Strengthening accountability’ page (in the section of ‘Statements of responsibilities’) in SS28/15 and SS35/15.

Removal of references to certain EU policy materials and consequential amendments

5.3 The PRA proposes to remove all references to certain EU policy materials from SS28/15 and SM&CR-related sections of the PRA Rulebook. In addition, the PRA has made three sets of consequential amendments. The first relates to gendered language – where, as per PS15/18, the PRA has taken steps to remove gendered language from the SM&CR. As such, the PRA proposes to make consequential changes in SS28/15 and SS35/15 to amend outstanding uses of legacy gendered language from the text. The second set of consequential amendments relate to clarifying that Rule 2.8 in Insurance – Senior Management Functions is also applicable to insurance special purpose vehicles (ISPVs). The third set of amendments relates to proposals to removal of redundant references to the Approved Persons Regime within SS 28/15 and SS35/15.6: PRA objectives

PRA objectives analysis

6.1 The SM&CR is a key part of the PRA’s regulatory framework directed to improving governance and risk management within regulated firms. It plays an important role in advancing the PRA’s primary objectives of promoting the safety and soundness of firms and ensuring an appropriate degree of protection for policyholders. The importance of individual accountability for well-run firms has been increasingly recognised by international standard setters and regulatory counterparts in the UK and abroad, several of whom have adopted similar regimes.

6.2 The proposals set out in this CP advance the PRA’s primary objectives in targeted ways, including by:

• extending the definition of SMF7 to cover controllers and their representatives if they exert significant influence on the day-to-day management of the firm’s affairs, strengthening the link between accountability and decision-making; and
• facilitating the appointment of suitably qualified individuals as resolution administrators (or to analogous roles) who may play a crucial role in containing threats to safety and soundness.

6.3 Otherwise, the proposals set out here are mainly directed to advancing the PRA’s secondary objectives of competition and competitiveness and growth and to enhancing the clarity and efficiency of the SM&CR, thereby reducing compliance costs. The PRA judges that these proposals will not reduce the SM&CR ability to support the PRA’s primary objectives.

6.4 At the same time, the proposal to amend the 12-week rule and provide additional clarity in relation to SMF determinations to assist firms attract talented individuals from outside the UK financial services sector may have benefits for both the primary and secondary objectives. Having a wider pool of senior decision-makers helps firms in developing their strategy and identifying new business opportunities, thereby enhancing growth and competitiveness. Alongside this, it could support the PRA’s primary objectives to the extent it helps firms draw on a deeper pool of senior individuals with strong risk management skills.

6.5 The PRA’s proposals to clarify which roles are likely to fall within in the SMF7 definition and which do not, for example, should provide greater certainty for firms as to when the PRA expects firms to make SMF applications in respect of such roles. In addition, clarifying that the PRA does not specify process to support certification will remind firms that they can adopt an approach that builds on their internal systems.

Cost benefit analysis (CBA)

6.6 The SM&CR was introduced in 2016 for banking institutions and in 2018 for insurance firms and is well embedded in firms’ practices and broadly works as intended. But subsequent experience has suggested potential enhancements that could be made to the regime.

6.7 The benefits to safety and soundness, gains to growth and competitiveness and compliance costs of the proposed changes to the SM&CR are hard to quantify. The benefits include a more flexible approach to addressing labour mobility and turnover among Senior Managers (through changes to the 12-week rule), and more clarity and consistency as to those senior individuals who come within the scope of the SM&CR. Greater clarity over fitness and propriety assessments could help ensure key roles are not left vacant for undue periods of time. Some one-off costs may arise from the proposed changes as firms need to familiarise themselves with the impact on their firm. This includes where firms need to identify if, as a result of proposed revisions to rules and expectations, additional (or fewer) individuals may fall within the scope of SMF7. Overall, the PRA assesses that the on-going direct costs of the proposed changes are assessed to be minimal, and that the benefits of the proposals outweigh the costs. The PRA’s Cost Benefit Analysis Panel was not consulted on the CBA as it was below the materiality threshold.^{footnote [11]}

12-week rule

6.8 Under the present 12-week rule, there is a 12-week period during which firms must submit an SMF application and the regulators must approve (or decline) the application. The proposed change would mean that firms would have up to 12 weeks to make an SMF application where the vacancy is temporary or reasonably unforeseen; the time taken for regulatory approval would not be counted as part of that timeframe. This would benefit firms by providing a longer window in which to identify high-quality candidates for SMF roles and prepare applications. It would not result in additional costs as the application process would remain the same.

Criminal records checks

6.9 As regards criminal records checks, the PRA proposes lengthening the period for which a criminal record check is valid. This change would reduce the cost of refreshing such documents. Consequently, it represents a modest reduction in the costs of hiring individuals subject to the SM&CR.

SMF7

6.10 The proposed changes in respect of SMF7 have two purposes. First, clarifying which persons holding roles elsewhere within a group entity may fall within the definition of a Group Entity Senior Manager (SMF7). Second to extend the definition to include controllers (or their representatives) that sit on the boards of regulated firms and have significant influence over the decision-making and day-to-day management of a firm. As regards to the first, in clarifying the definition of SMF7 in respect of persons holding roles elsewhere in a group, the PRA is not seeking to materially increase the overall number of individuals who have this designation. Rather the purpose would be to ensure that SMF7 is used consistently across firms in respect of individuals who have significant influence. The PRA does not envisage extra administrative costs for firms; and anticipates that there will not be a significant increase in the number of individuals who are captured.

6.11 In the case of controllers, some additional individuals might become SMF7. This may create costs for firms were it to inhibit such individuals from investing in regulated firms to the extent they intend to have significant influence over the affairs of the firm. This is mitigated by the fact that controllers must already meet fitness and propriety tests (to a similar but different standard to that for an SMF). Moreover, investors are likely to be attracted by a regime that maintains high regulatory standards. The benefits of the proposal arise from ensuring that those who act as key decision makers and direct the day-to-day affairs of a firm are fit and proper for their role and accountable for their decisions, given their ability to influence the overall safety and soundness of firms. On balance, the PRA judges that the additional benefits from ensuring accountability of all individuals able to direct the affairs of regulated firms outweigh the costs that might arise from such action.

Conduct Rules

6.12 Under the proposals, the Senior Manager Conduct Rules would apply to those holding SMF roles on a temporary basis under the 12-week rule. Currently, these apply only to individuals approved as SMF holders by the regulators. Such an extension would serve to promote safety and soundness by requiring that all those who could affect a firm’s risk profile at an SMF level would be subject to a requirement to take ‘reasonable steps’ in executing their duties. It would thereby confer a benefit by creating a further incentive supporting better risk management. While this would add to the responsibilities of those exercising SMF on a temporary basis, a number of such individuals may expect to hold a permanent SMF position in due course, which would significantly mitigate any disincentive effect to providing cover. The PRA considers that this proposal will not lead to material additional costs and will provide safety and soundness benefits.

Regulatory references

6.13 In asking firms to consider carefully what information they may appropriately include in a regulatory reference; the PRA seeks to promote greater symmetry between the information available to hiring firms and candidates. The PRA considers that this proposal will not lead to material additional costs and will provide safety and soundness benefits to the extent that hiring firms can take more informed decisions of the fitness and propriety of senior staff.

Resolution Administrators

6.14 Resolution administrators (appointed by the Bank) and other appointments (made by the Bank and HMT) for the purposes of stabilising a bank or building society would be exempt from the SM&CR. The benefits of the proposal are:

• the exemption would enable a speedy appointment, helping to stabilise a bank or building society in circumstances that would otherwise have negative implications for safety and soundness. Such appointment would be made by the Bank of England or HMT pursuant to public policy goals and would consider the fitness of the individuals appointed; and
• In the absence of an exemption, the pool of individuals willing to take on such roles, might be reduced with adverse effects on the PRA’s safety and soundness objective.

6.15 Combined they also support the Bank’s financial stability objective as the change can help ensure high quality individuals are brought in quickly to facilitate an orderly resolution.

Navigability

6.16 The addition of material to the Supervisory Statement and to the website to guide stakeholders to the key provisions of the SM&CR responds to requests in the DP feedback. It will therefore assist in reducing administrative costs to firms and other stakeholders.

‘Have regards’ analysis

6.17 In developing these proposals, the PRA has had regard to, among other things, the FSMA regulatory principles. The regulatory principles considered most material to the proposals included:

• The principle that a burden or restriction which is imposed on a person should be proportionate to the benefits which are expected to result from the imposition of that burden (FSMA regulatory principles): The proposed changes to the 12-week rule recognise the challenges that firms may face in finding suitable persons to fill Senior Manager vacancies at short notice, while recognising the ongoing importance of active succession planning.
• The principle that the PRA should exercise its functions transparently (FSMA regulatory principles and Legislative and Regulatory Reform Act of 2006): Amending supervisory statements to provide clearer guidance on the scope of SMF7 role and the circumstances in which the 12-week rule is applicable will assist firms by making relevant rules and expectations easier to navigate. Similarly, developing a SM&CR policy index and providing visibility of an inventory of Senior Manager expectations.
• Responsibility of firms’ senior management subject to requirements imposed by FSMA (FSMA regulatory principles): The core purpose of the SM&CR is to strengthen individual accountability in order to achieve better prudential outcomes. The proposed changes for SMF7s, seek to align accountability and decision-making for those with significant influence on the firm. In the case of resolution administrators (or similar appointments) the intention is to exclude individuals from SM&CR only where alternative accountability mechanisms are in place, and in situations where facilitating an orderly resolution would advance the PRA’s primary objectives.

6.18 HMT’s recommendations for the PRC: The PRA acknowledges the November 2024 remit letter, and its initial view is that the intended effects of the proposals in this CP are in line with the new recommendations. The PRA will consider the recommendations further and have regard to the matters set out by HMT when publishing the final policy.

6.19 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for these proposals, it is because the PRA considers that ‘have regard’ to not be a significant factor for these proposals.

Impact on mutuals

6.20 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no different from the impact on other firms. The proposed amendments to remove frictions and provide clarifications are generally applicable to mutuals and other firms.

Equality and diversity

6.21 In developing its proposals, the PRA has had due regard to the equality objectives under s149 of the Equality Act 2010. The PRA considers that the proposals do not give rise to adverse equality and diversity implications.