FCA Regulatory Update: November 2026

The FCA has published a series of significant regulatory updates affecting financial services firms, including proposed reforms to the Senior Managers and Certification Regime (SM&CR), changes to financial crime guidance, fresh insights on fair value under Consumer Duty, and developments in complaints reporting requirements.

From reducing regulatory burdens on firms and reshaping individual accountability frameworks to strengthening financial crime controls and improving consumer outcomes, these proposals could have important implications for governance, compliance, and operational processes across the industry.

This month's regulatory update highlights the key changes firms should be monitoring and preparing for.

FCA consults on further reforms to the Senior Managers and Certification Regime (SM&CR)

The major news this month is that the FCA has published a second consultation on reforms to the SM&CR, proposing further changes to simplify the regime, reduce administrative burdens and make requirements more proportionate, while maintaining high standards of individual accountability and conduct.

The proposals build on the first phase of reforms confirmed in PS26/6 and follow changes proposed under the Financial Services and Markets Bill, which will give the FCA and PRA greater flexibility to determine how the regime operates through their own rules.

Key proposals include:

• Fewer Senior Management Functions (SMFs): Removing certain SMF roles and making some other appointments subject to notification rather than formal regulatory approval. The FCA also proposes streamlining the application process.

• Changes to the Enhanced regime: Raising the thresholds for Enhanced SM&CR classification, potentially reducing the number of firms subject to its additional requirements.

• Reduced regulatory reporting: Removing the requirement to routinely submit updated Statements of Responsibilities (SoRs) and Management Responsibilities Maps (MRMs) when responsibilities or governance arrangements change. Firms will still need to maintain up-to-date internal records and provide them to regulators on request. Firms with only one individual performing SMF roles would no longer need to maintain a formal SoR under the proposals.

• Removal of the Certification Regime: The FCA proposes removing the formal Certification Regime, including the requirement for firms to certify relevant individuals annually. However, firms will remain responsible for ensuring employees are fit and proper, competent and suitable for their roles. Existing SYSC requirements, Conduct Rules, relevant qualification requirements and normal employment practices, such as performance management and referencing, will continue to support these obligations.

• Retirement of the Directory: The FCA proposes discontinuing the Directory of certified and assessed persons.

• Simplified Conduct Rules requirements: Reducing the associated training burden and raising the threshold for reporting Conduct Rules breaches to the FCA.

  
  

Other proposed changes include extending the period for firms to submit SMF applications or notifications from 12 to 18 weeks, alongside reducing the FCA's statutory determination period for SMF applications from three months to two months. The FCA considers that these changes should provide firms with greater flexibility without significantly extending the period individuals perform SMF roles before regulatory approval takes effect.

The consultation also addresses the disclosure of historic disciplinary matters. Firms would be expected to disclose previous breaches where the disciplinary action met the reporting threshold applicable to the individual's role at the time. For example, a first written warning would not normally need to be disclosed unless the individual held an SMF or equivalent role when the disciplinary action occurred.

Financial Crime Guide Updates

The FCA has consulted on proposed updates to its Financial Crime Guide (CP26/38), reflecting emerging financial crime risks and developments in areas including fraud, sanctions, proliferation financing, data security and the use of technology.

The proposals are particularly relevant to customer onboarding, identity verification and oversight of third-party providers. The FCA highlights the importance of identifying suspicious behaviour, synthetic identities, manipulated documentation and AI-assisted impersonation. Firms should consider whether their existing procedures are sufficiently robust to identify inconsistencies in customer information and whether staff know when and how to escalate concerns.

The proposed guidance also reinforces the importance of appropriate oversight of external providers, including electronic identity verification services, fraud screening tools and introducer arrangements. Using an external provider does not remove a firm’s responsibility for ensuring that its financial crime controls operate effectively.

The consultation does not introduce new regulatory requirements, but the changes to the Guide would provide further clarity on the FCA’s expectation of firms’ existing financial crime controls. The consultation closes on 24 December 2026.

Fair value in consumer finance: good and poor practice

The FCA has published findings from its supervisory work examining how consumer finance firms assess, evidence and monitor fair value under the Consumer Duty. The publication identifies examples of good practice alongside areas where firms need to improve their approach.

The FCA found that some firms relied too heavily on assumptions, general statements or incomplete management information when concluding that their products and services provided fair value. Assessments should consider the total price customers may pay, including interest, regular and contingent charges, as well as non-financial costs such as time, effort and inconvenience.

Firms should also consider whether different customer groups, including those with characteristics of vulnerability or experiencing financial difficulty, receive fair value. Particular attention is given to repeat and cumulative charges, with examples of good practice including grace periods, limits on repeat fees and appropriate fee waivers or refunds.

The FCA emphasises that fair value assessments should be supported by relevant MI, customer feedback, complaints and arrears information, with ongoing monitoring to identify and address poor outcomes. Smaller firms do not need complex modelling or extensive governance structures but must be able to evidence and explain their conclusions.

Complaints Reporting Updates

The reporting complaints webpage has been updated to include a new section on resources for the new COM001 return that will replace DISP1 Annex 1 and the Consumer Credit Return (CCR). Firms affected by these changes will need to make the appropriate internal process and system changes to meet the requirements in PS25/19.

The RegData resources webpage has also been updated with guides to understand the new complaints return, which include the XML specifications and details of validation rules. There is also a new data-capture flow diagram to help firms understand which questions to complete and how the return captures information.

Firms that track regulatory developments carefully are better positioned to protect their business and maintain compliance. A bespoke regulatory update, curated by our in-house experts gives your firm’s Senior Management a clear view of what’s changing and what’s coming next. Instead of reacting to reforms once they’re finalised, our detailed document enables financial services firms to gain an early understanding of the themes, proposals and supervisory priorities most relevant to their activities. Contact Robert Bell to find out more.