Financial regulators have unveiled plans to scale back parts of the accountability regime introduced in the aftermath of the 2008 financial crisis, arguing the changes could save the financial services industry around £2 billion over the next decade while reducing unnecessary regulatory burdens. The proposals, put forward by the Bank of England’s Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), would significantly reduce the number of financial services employees subject to enhanced regulatory checks. Around 139,000 to 140,000 staff below senior management level would no longer require annual certification and fit-and-proper assessments. Under the plans, the strictest scrutiny would remain focused on the industry’s most senior figures, including chief executives, chief financial officers and board chairs, who would continue to require regulatory approval before taking up their roles. The Senior Managers and Certification Regime (SM&CR) was introduced a decade ago to strengthen accountability across the financial sector after widespread criticism that few senior banking executives faced personal consequences for actions that contributed to the global financial crisis. Regulators insist the latest reforms are intended to streamline administration rather than weaken standards. They argue that firms will remain responsible for ensuring employees are competent, suitable for their roles and held accountable for misconduct. The proposals would also reduce reporting requirements for lower-level misconduct cases. Rather than reporting minor breaches and first warnings, firms would generally be required to notify regulators only of more serious misconduct or cases resulting in final warnings or dismissal.
Focus on Growth and Competitiveness
The move forms part of a wider government and regulatory effort to improve the competitiveness of the UK’s financial services sector.
According to the Bank of England and FCA, reducing compliance requirements will help firms recruit talent more quickly, invest in innovation and direct more resources towards serving customers and supporting economic growth. The regulators estimate the measures could deliver significant cost savings across the industry while reducing regulatory administration costs by hundreds of millions of pounds. Critics, however, may question whether reducing oversight risks diluting accountability standards established after the banking crisis, particularly at a time when public trust in financial institutions remains an important issue.
Why It Matters to the West Midlands
The West Midlands has a growing financial and professional services sector, employing tens of thousands of people across Birmingham, Solihull and the wider region.
Birmingham is home to major banking, insurance, legal and investment operations, making the region particularly sensitive to changes in financial regulation. Supporters of the reforms argue that reducing bureaucracy could help firms expand, create jobs and attract investment. Opponents may counter that maintaining strong governance standards remains essential to protecting consumers and preserving confidence in the financial system.
What Happens Next?
The FCA and PRA have launched consultations on the proposed reforms, with final policy decisions expected during 2027. Until then, industry leaders, consumer groups and financial institutions will be given the opportunity to provide feedback on what would be one of the most significant changes to the accountability regime since it was introduced following the financial crisis.
Please note, this article is the view of the author and should not be considered financial advice.
