PS26/6 Phase 2: Certification Regime Removal and Your Section 250 Exposure Map

What PS26/6 says about Phase 2

FCA Policy Statement PS26/6, published 22 April 2026, addresses the FCA's proposed simplification of SM&CR. The Phase 1 changes — NFM/COCON updates, temporary cover clarifications, guidance on the scope of the Senior Managers Regime — take effect in September 2026 and do not require new legislation.

Phase 2 is different. PS26/6 signals the FCA's intention to remove the Certification Regime as a distinct tier of the SM&CR framework, replacing annual certification of a defined list of functions with broader conduct-rules obligations and enhanced disclosure requirements. The FCA has been clear that Phase 2 requires new primary legislation. No legislation has been introduced as of June 2026. No implementation date has been confirmed. The PS26/6 Phase 2 proposals remain a statement of policy intent — not a current regulatory obligation.

Firms should plan on the basis that Phase 2 is a future development with uncertain timing, not an imminent change to act on now. The current SM&CR structure — Senior Managers Regime, Certification Regime, Conduct Rules staff — remains in effect.

How SM&CR and Section 250 relate (and where they diverge)

To understand why Phase 2 matters for s.250 exposure, it helps to start with how the two frameworks relate — and where they part ways. The SM&CR approved persons guide covers this in detail; what follows is the version relevant to the Phase 2 question.

SM&CR is a registration and certification framework under FSMA 2000. It defines who needs FCA pre-approval (SMF holders), who the firm must certify annually (Certified Persons), and who is subject to Conduct Rules (broadly everyone else). It exists to pin regulatory accountability to specific functions and individuals.

Section 250 of the Crime and Policing Act 2026 (c.20) is a corporate criminal attribution mechanism under primary legislation. It attributes a qualifying senior manager's criminal offence to the organisation, where the offence occurs within the actual or apparent scope of their authority. "Senior manager" is defined in s.250(3) by a functional test: an individual who plays a significant role in the making of decisions about how the whole or a substantial part of the organisation's activities are managed or organised, or in the managing or organising of those activities. That test covers all activities, not only financial ones. It turns on actual organisational authority, not FCA registration or certification status.

SM&CR defines the regulated population. Section 250 defines the criminally-attributed population. The second population is almost always wider than the first.

Simplified SM&CR does not equal reduced criminal exposure

Here is the argument some are making: if Phase 2 removes the Certification Regime, the regulated population shrinks. If fewer individuals are in scope under SM&CR, the gap is smaller. If the gap is smaller, the Section 250 exposure is lower.

That argument is wrong, and here is why.

The s.250(3) functional test does not map to SM&CR structure. It is written in the Crime and Policing Act 2026, not in FSMA or the FCA Handbook. Parliament defined who counts as a "senior manager" for s.250 purposes; the FCA cannot alter that definition by changing the SM&CR framework. A Phase 2 reform that removes the Certification Regime as an SM&CR tier does not remove any individual from the s.250(3) population. Whether you are Certified under SM&CR is not part of the s.250(3) question.

In fact, the direction of Phase 2 may widen the visible gap rather than close it. The Certification Regime is the FCA's current mechanism for identifying and documenting a significant population of conduct-relevant individuals below SMF level. If that mechanism is removed or replaced with a broader, less defined obligation, firms will need to maintain their own comprehensive mapping of who exercises significant organisational authority — which is essentially what the s.250(3) analysis requires anyway. The disappearance of the FCA's Certified Persons list as a ready reference does not reduce the s.250 exposure; it removes a convenient data source for identifying it.

The widening-gap argument is this: as SM&CR simplification proceeds, the documented FCA-managed population shrinks. The s.250(3) population stays the same size or grows. The gap between the two widens. Firms that relied on the SM&CR register as a proxy for their s.250 exposure map will need to do more independent work.

The practical implication for gap analysis

A Section 250 gap analysis done today uses the FCA Certified Persons register as part of the baseline: who is SMF-approved or Certified gives you the "currently covered" half of the gap equation. That data is available now. CoverProof pulls it directly from the FCA register extract.

Once Phase 2 happens (if and when it receives the legislation it requires), the Certified Persons list ceases to exist as a distinct category. Firms will need to build their s.250(3) population map independently of FCA registration data — because the FCA will no longer maintain the category the register currently captures.

The practical implication is forward-looking: firms that have already completed a thorough s.250(3) gap analysis — going beyond the FCA register to map actual organisational authority using the functional test — will be well-positioned regardless of what Phase 2 does to SM&CR structure. Firms that have treated the Certified Persons register as a ceiling rather than a floor will face a larger task when Phase 2 arrives.

The s.250(3) analysis is the work that is required under primary legislation now. Phase 2 makes that analysis more, not less, important.

What firms should do given Phase 2 uncertainty

Phase 2 has no confirmed implementation date. The honest position as of June 2026: it is a stated policy intent, requiring legislation that has not yet been introduced. Planning around it makes sense; operational changes in anticipation of it are premature.

For the s.250 work, the action is clear regardless of Phase 2 timing. Section 250 is in force from 29 June 2026. The gap analysis, the declaration cycle, and the board evidence pack are obligations under primary legislation that exists now. Phase 2 does not affect that.

For SM&CR governance, firms should continue to maintain their Certified Persons regime as currently structured. They should monitor FCA publications and any legislative developments for Phase 2 progress. When and if legislation is introduced, the FCA will publish implementation guidance and a transition timeline.

For gap analysis methodology: the most future-proof approach is to build the s.250(3) population map from the functional test, not from the FCA register categories. Use the register data as input, not as the answer. The functional test — who plays a significant role in managing or organising the whole or a substantial part of the firm's activities — will still be the right question when Phase 2 eventually arrives, even if the SM&CR categories that partially overlap with it have changed.

Related articles

Sources

• FCA PS26/6 — Policy Statement, 22 Apr 2026www.fca.org.uk/publication/policy/ps26-6.pdf
• Crime and Policing Act 2026, s.250 (c.20)www.legislation.gov.uk/ukpga/2026/20/section/250
• FCA — Senior Managers and Certification Regimewww.fca.org.uk/firms/senior-managers-certification-regime
• Financial Services and Markets Act 2000 (SM&CR provisions)www.legislation.gov.uk/ukpga/2000/8/contents