RegTech and SM&CR: Automating Senior Manager Accountability in a Post-FCA Crackdown Era

In an era of heightened regulatory scrutiny, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have ramped up enforcement under the Senior Managers and Certification Regime (SM&CR), with fines surging dramatically. As the regime evolves through ongoing reviews, RegTech solutions are emerging as game-changers. These technologies promise to streamline compliance, reduce burdens, and shield firms from penalties.

This article explores how automation can transform senior manager accountability, drawing on the latest 2025 reforms and practical insights for compliance professionals.

The Evolving Regulatory Landscape: FCA and PRA’s SM&CR Enforcement Trends

The SM&CR, introduced to enhance individual accountability in financial services, has been under review since the government’s announcement in December 2022, as part of the Edinburgh Reforms, that the Treasury, FCA and PRA would begin reviews. In March 2023, the FCA and PRA jointly published Discussion Paper DP23/3, inviting views on the regime’s effectiveness and proportionality. Fast-forward to July 2025, and the regulators have launched coordinated consultations, the FCA’s CP25/21 and PRA’s CP18/25, proposing phase 1 reforms to simplify the regime without legislative changes.¹

Key proposals from these reviews include extending flexibility for senior manager approvals under the 12-week rule, reducing certification duplications by 15%, and providing clearer guidance on ‘fit and proper’ assessments.² Phase 2, involving HM Treasury (HMT), could see the certification regime replaced entirely and fewer senior roles requiring pre-approval, aiming to halve regulatory burdens.³

Enforcement has intensified: FCA fines for conduct failures jumped 337% from £41.2 million in 2023/24 to £186.4 million in 2024/25, with many linked to SM&CR lapses like inadequate oversight.⁴

These trends underscore the need for efficient compliance tools, as manual processes expose firms to risks.

The Role of RegTech for SM&CR Automation

In the context of the FCA and PRA’s 2025 reviews, RegTech is playing a pivotal role in automating SM&CR processes, helping firms navigate increased enforcement while aligning with proposed reforms. By streamlining tasks such as certification tracking, conduct monitoring, and reporting, RegTech tools reduce administrative burdens and enhance compliance efficiency. For example, automated platforms can manage Statements of Responsibilities and ‘fit and proper’ assessments, supporting the consultations’ aims to extend flexibility.⁵ This automation directly addresses challenges like backlog in senior manager approvals, as highlighted in the phase 1 proposals, and prepares firms for phase 2 changes, such as potentially replacing the certification regime.⁶

RegTech’s value is evident in its ability to integrate with existing workflows, providing real-time updates and audit-ready documentation. This is particularly beneficial for compliance consultancies and asset managers dealing with cross-border EU-UK requirements, where tools can automate regulatory references, have real-time updates and audit-ready documentation. As enforcement intensifies, RegTech ensures firms can demonstrate robust governance, mitigating risks tied to the FCA’s focus on individual accountability.

Pros and Cons of Automating SM&CR with RegTech

While RegTech offers substantial advantages, it’s essential to weigh the benefits against potential drawbacks for a balanced implementation.

Pros for Firms:

• Cost Savings: Automation can lower compliance expenses with better results.
• Risk Mitigation: Streamlined monitoring helps prevent breaches, aligning with the FCA’s emphasis on proactive accountability amid rising penalties.
• Scalability: Supports handling of cross-border compliance, especially as phase 2 reforms may reduce the number of pre-approved senior roles.⁷

Pros for Compliance Professionals:

• Workload Reduction: RegTech handles routine tasks like annual certifications, allowing more time for strategic oversight.⁸
• Liability Protection: Automated records provide clear evidence against personal fines, crucial given the FCA’s increased enforcement against individuals, with 83 open investigations as of 2025.
• Skill Development: Familiarity with digital tools enhances expertise in an evolving regulatory environment.

Cons

• Implementation Challenges: High upfront costs and legacy system integration could delay returns.
• Data Privacy Risks: Tools must adhere to GDPR standards, with potential issues if compliance monitoring introduces unintended biases.
• Regulatory Flux: Evolving guidelines, like those in CP25/21, may require adaptations.

Overall, RegTech offers firms and compliance professionals a clear pathway to managing SM&CR more efficiently. While implementation and regulatory uncertainty remain hurdles, the ability to cut costs, reduce risk, and strengthen accountability often outweighs these challenges. For organisations willing to invest early, automation is not just a compliance tool; it can become a strategic advantage.

How Leo RegTech Streamlines SM&CR Processes

Leo RegTech offers a cutting-edge platform designed to help firms navigate the intricacies of financial regulations, and it assists solo-regulated firms in navigating SM&CR with ease. It automates applications for Senior Management Functions via FCA Connect and handles annual recertifications and training seamlessly.

• Automated Data Gathering: Collect information from senior managers effortlessly.
• CPD Training: Keep up to date with training for SM&CR compliance.
• Reminder System: Send automatic alerts, eliminating manual chasing.

By turning regulatory burdens into streamlined workflows, Leo helps firms avoid fines while aligning with the FCA and PRA’s 2025 reforms.

Conclusion

As the FCA and PRA’s 2025 reviews signal a shift towards proportionality, RegTech stands ready to automate accountability. With consultation papers closing on 7 October 2025, and new changes probably coming in 2026, now is the time for compliance professionals to engage and adopt solutions like Leo RegTech. How prepared is your organisation for this new era?

If you want to learn more about how we can help, contact us below.

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References

1. https://www.fca.org.uk/publications/consultation-papers/cp25-21-senior-managers-certification-regime-review / https://www.bankofengland.co.uk/prudential-regulation/publication/2025/july/review-of-the-senior-managers-and-certification-regime-consultation-paper ↩︎
2. https://www.fca.org.uk/publications/consultation-papers/cp25-21-senior-managers-certification-regime-review ↩︎
3. https://www.dlapiper.com/en/insights/publications/2025/07/key-takeaways-july-2025-sm-and-cr-reform-proposals ↩︎
4. https://www.macfarlanes.com/what-we-think/102eli5/fca-enforcement-data-2024-2025-unpacked-102ku1w / https://www.fca.org.uk/data/fca-operating-service-metrics-2024-25/enforcement-data ↩︎
5. https://www.fca.org.uk/news/news-stories/2024-fines ↩︎
6. https://www.stephensonharwood.com/insights/fca-enforcement-data-2024-25-what-does-this-tell-us-in-terms-of-enforcement-trends ↩︎
7. https://www.stephensonharwood.com/insights/fca-enforcement-data-2024-25-what-does-this-tell-us-in-terms-of-enforcement-trends ↩︎
8. https://www.compliancecorylated.com/news/uk-fca-increased-penalties-on-individuals-in-24-25-83-investigations-open/ ↩︎