The FCA’s Insurance Regulatory Priorities document (24 February 2026) contains two deregulatory signals that have generated a lot of law firm commentary. Browne Jacobson called it an “unprecedented rollback.” Skadden wrote about “regulatory relief.” The LMA has been quiet but pleased.
Neither characterisation is wrong as a directional statement. Both are misleading as operational guidance for pricing governance teams.
Here is what is actually happening, what is not, and what you should do about it now.
Two signals, two very different timelines
Signal 1 — SMCR reform: The FCA committed (jointly with PRA and HM Treasury) to halve the administrative burden of the Senior Managers and Certification Regime. The primary consultation is CP25/21 (July 2025), with a Policy Statement expected mid-2026. A Phase 1 of changes is largely administrative. Phase 2 — where structural changes to SMF roles could occur — requires HM Treasury legislation and has no confirmed timeline.
Signal 2 — Consumer Duty non-UK disapply: Nikhil Rathi wrote to the Chancellor on 30 September 2025 committing to consult on removing non-UK customers from Consumer Duty scope. The February 2026 document reconfirms: “We will consult on disapplying the Consumer Duty to non-UK business and review the international scope of ICOBS and PROD 4.” The consultation is planned for Q2 2026. As of today, there is no CP number.
The critical point: neither of these is a done deal yet. Both matter. They matter in completely different ways and on completely different timescales.
SMCR Phase 1: what it actually is
CP25/21 Phase 1 is administrative streamlining. The concrete measures are:
- Certification regime: The legislative basis for the current certification regime will be repealed; FCA/PRA will replace it via rulebook powers, with estimated 15% reduction in certification roles through removing duplicates for individuals performing multiple overlapping functions.
- Statements of Responsibilities (SoRs): Firms may submit updated SoRs every 6 months after a significant change rather than immediately on each change.
- Financial thresholds: Increased approximately 30% for inflation, reducing the number of firms subject to the most demanding requirements.
- SMF7 guidance: Clearer definition to reduce unnecessary Group Entity Senior Manager applications.
- Criminal record checks: Extended from 3 to 6 months validity; duplicates removed for internal moves.
What Phase 1 does not change:
- Prescribed responsibilities — the FCA explicitly states no change to PRs in Phase 1. The named PRs covering model risk, product governance, and compliance oversight remain assigned as per existing documentation.
- SMF roles — no roles removed. SMF4 (Chief Risk), SMF5 (Head of Internal Audit), SMF16 (Compliance Oversight), SMF20 (Head of Actuarial Function), SMF24 (Chief Operations) all remain.
- Management Responsibilities Maps — still required, now on a 6-month update cycle rather than continuous.
- Accountability chains — unchanged. Individual SMF holders remain accountable for whatever their SoR names.
For Solvency II insurers: PRA CP18/25 runs parallel to CP25/21. Where a Key Function Holder already meets the equivalent SMF definition, firms no longer need to submit a separate Form M notification alongside the SMF application. This is deduplication of paperwork, not a change in who is accountable for what.
Why this matters almost nothing for model risk governance
PRA SS1/23 (May 2023) is the supervisory statement on Model Risk Management. It requires explicit SMCR linkage: a named SMF holder implements the MRM framework, that person’s Statement of Responsibilities names the MRM implementation accountability, and Internal Audit (SMF5) provides independent annual effectiveness assessment.
In most insurers, SMF4 (the CRO) owns the MRM framework — not SMF20 (Head of Actuarial). The sign-off chain for new pricing models runs through independent validation (typically the CRO’s team) to SMF4. If you have a Chief Actuary who is an SMF20, their SoR covers the actuarial function; model risk policy ownership sits with risk, not actuarial, in the standard configuration.
Phase 1 changes one thing here: if your Head of Validation leaves and a replacement joins, you now have 6 months rather than immediate obligation to file the updated SoR acknowledging the new person’s model governance responsibilities. That is it. The MRM policy ownership, the validation sign-off chains, the model inventory, the model approval governance — none of it is touched.
We have read the law firm summaries. None of them mention SS1/23. We think that is the right conclusion from Phase 1: nothing to mention.
If you are considering pre-emptive redesign of your accountability maps in anticipation of Phase 2, stop. Phase 2 requires primary legislation. As of March 2026, no draft legislation has been published. The plausible horizon is 2027 at earliest — and whether Phase 2 includes a reduction in named SMF roles remains speculative. The insurance-governance MRM inventory currently maps to SMF4 as the default MRM accountable role. We will update the library when there is a substantive change to document.
Consumer Duty non-UK: what is actually on the table
This one matters more for specialty and Lloyd’s market firms, and the direction is clear even though the detail is not confirmed.
The proposed scope is business where both the customer and the insured risk are located outside the UK. The FCA acknowledges that some firms have been applying Consumer Duty extraterritorially due to ambiguity in PRIN 2A territorial scope. Browne Jacobson (March 2026) notes this specifically: some firms “have been applying the Duty extraterritorially.” The FCA has tacitly acknowledged this is disproportionate, particularly for specialty lines where the ‘customer’ is a large international corporation.
Lloyd’s managing agents have been lobbying on territorial scope for at least three years — the LMA Legal Director confirmed this in the January 2026 LMA regulatory outlook. The February 2026 document is the first time the FCA has explicitly committed to act.
If the disapply proceeds as signalled, what changes:
- PRIN 2A fair value assessments — no longer required for non-UK business. Some managing agents are currently producing fair value documentation for non-UK specialty risks. Under Consumer Duty disapply, this stops.
- PROD 4 product governance — the product approval and review process, including target market documentation and value assessments, may be disapplied for non-UK lines.
- ICOBS disclosure requirements — suitability documentation and customer communication standards may not apply to non-UK business.
- Pricing fairness audits — the PRIN 2A.4 requirement to evidence that prices do not produce poor value outcomes would not apply to those lines.
What remains uncertain: the definition of ‘non-UK customer’ (domicile, risk location, or policy jurisdiction?), treatment of UK entities in the distribution chain, whether the FCA imposes a lighter alternative framework rather than clean removal, and whether ICOBS and PROD 4 changes are bundled into the same consultation or separate. PS25/21 (November 2025) has already simplified some ICOBS provisions and introduced the lead firm model for co-insurance PROD 4 obligations — that is already live and operational.
What to do now
Do not drop Consumer Duty compliance for non-UK business. The consultation has not been published. The rules as they stand apply. Any firm that pulls its Consumer Duty documentation for international lines before the Policy Statement is in force is taking regulatory risk on a commitment letter, not a confirmed rule change.
Do not redesign your SMCR accountability maps. Phase 1 changes nothing structural. Phase 2 has no confirmed timeline or confirmed scope. Your SoR, your MRM policy ownership, your SS1/23 governance chain — leave it alone until there is something to respond to.
Do map your Consumer Duty compliance cost on non-UK lines now. When the Q2 2026 consultation lands, you will want to respond with specifics: what documentation you are currently producing, how many analyst days per year it requires, which lines it covers. Firms with precise compliance cost data will be better positioned to respond to the consultation and will have the evidence to move quickly once the Policy Statement confirms scope. The insurance-monitoring outcomes monitoring module tracks Consumer Duty outcome data at line-of-business level — if you are using it, tagging your non-UK lines explicitly now means you can pull that cost picture cleanly when the CP drops.
Watch for the Q2 2026 CP. This is the one worth preparing for. If the disapply is as broad as signalled — all business where customer and risk are both non-UK — it is material for Lloyd’s syndicates, London market specialty writers, and cross-border commercial lines. Given the typical 12-18 month gap between consultation and final rules, any operational changes are still 2027 at earliest. But the response window is Q2/Q3 2026.
The honest summary
The Browne Jacobson “unprecedented rollback” headline is accurate as a statement about the direction of travel over a 3-5 year horizon. As a description of what has changed in Q1 2026, it overstates the position substantially.
SMCR Phase 1 is process relief. It is genuinely useful — the 6-month SoR window and deduplication of certification checks reduce administrative overhead — but it changes nothing about who is accountable for what. SS1/23, model risk governance, pricing model sign-off chains: untouched.
The Consumer Duty non-UK signal is the more consequential one, and it is at consultation design stage, not implementation stage. For Lloyd’s and specialty market pricing teams, Q2 2026 is when the work starts.
- The FCA’s First Consolidated Insurance Priorities — the source document in full, all four pillars
- One Package, One Install: PRA SS1/23 Validation and MRM Governance Unified — the
insurance-governancelibrary and how SS1/23 accountability links to SMF4 - Consumer Duty Outcomes Monitoring — tracking PRIN 2A outcomes at line-of-business level