SMF13 Chair of Nominations Committee

Chair of Nominations Committee (SMF13) Appointments: Succession Governance

The Chair of the Nominations Committee at an FCA-regulated firm holds a designation that is structurally different from the other committee chair functions under SMCR. The SMF13 holder is not primarily accountable for a functional risk or governance domain — they are accountable for the quality of the process by which the firm’s senior leadership and board are selected, developed, and succeeded. In a regulatory framework that places personal accountability on named individuals, the quality of that selection process is not a governance nicety — it is one of the primary determinants of whether the firm will be governed well or badly over time.

Yet the SMF13 appointment frequently receives the least structured attention of any committee chair function at regulated firms. Nomination committees are often chaired by the board Chair (SMF9) who doubles as SMF13, the designation is sometimes held by whichever NED happens to have the most seniority, and the committee’s work is frequently reduced to a formal annual review of the board composition matrix. This guide addresses what the SMF13 role actually requires and what strong appointments to this function look like.

The SMF13 Designation: What Personal Accountability Covers

The SMF13 designation covers the Chair of the Nominations Committee function at FCA-regulated firms required to maintain a Nominations Committee. The SMF13 holder is personally accountable for the committee’s oversight of the firm’s board and senior management succession planning — including the identification of succession candidates for all Senior Management Functions, the assessment of the board’s collective competence against the regulatory and commercial requirements of the firm’s activities, and the management of the appointment process when an SMF vacancy arises.

Under the FCA Handbook SUP 10A and the associated governance requirements, the Nominations Committee is the primary governance body responsible for ensuring that the firm has a credible succession plan for its senior management functions. The FCA expects this plan to be genuine — identifying specific potential successors, assessing their readiness, and considering the interim coverage arrangements that would apply if a vacancy arose unexpectedly. The SMF13 holder is the individual most directly accountable for whether this standard is met.

The NomCo’s Regulatory Role Beyond Succession

The Nominations Committee’s responsibilities at a regulated firm extend beyond the appointment and succession planning functions that the designation most obviously implies. The committee also typically has a role in the ongoing fitness and propriety assessment of the board and senior management, in the annual board effectiveness review, in the oversight of diversity and inclusion governance, and in the assessment of whether the board’s collective knowledge, skills and experience meet the requirements of the firm’s current and planned regulatory permissions.

The fitness and propriety dimension is particularly significant. At regulated firms, the Nominations Committee should be reviewing whether each board member and SMF holder continues to meet the FCA’s fitness and propriety standards on an ongoing basis — not only at the point of initial appointment. This includes monitoring for changes in individual directors’ financial positions, conducting regulatory reference checks when new information about a director’s previous conduct becomes available, and managing the process when a fitness and propriety concern arises in respect of an existing board member.

This ongoing fitness monitoring function is one of the most underperformed aspects of Nominations Committee governance. Most regulated firms conduct a formal fitness and propriety assessment at appointment and annually certify its outcome, but few have a genuinely active monitoring process that would identify a fitness and propriety concern arising between certification cycles. The SMF13 holder is the individual who should be asking whether such a process exists and whether it is functioning adequately.

Succession Planning: What the FCA Expects the NomCo to Deliver

The FCA’s expectation of succession planning at regulated firms is substantially higher than what most Nominations Committees are currently delivering. The regulator expects to see evidence of genuine succession planning in board minutes and committee papers — not policy statements, but actual assessments of which individuals could succeed each SMF holder, what their development needs are, and what the firm would do if a vacancy arose unexpectedly in the next six months.

The SMF13 Chair is responsible for ensuring this work happens and is recorded. This means leading an annual succession planning review that assesses each SMF function specifically, identifying whether internal candidates are development-ready or whether an external search would be required, and ensuring that the board as a whole understands the succession risks associated with the firm’s current senior management profile — including concentration risks where multiple SMF functions depend on a small number of individuals.

At smaller regulated firms where the Nominations Committee Chair may also be the board Chair, this succession planning responsibility includes the Chair’s own succession — which requires particular care to ensure that the process is not managed in a way that gives the incumbent Chair excessive influence over the selection of their successor. Best practice is for the Senior Independent Director (SMF14) to lead the Chair succession process rather than the incumbent Chair, precisely to manage this governance risk.

Diversity and Inclusion: The NomCo’s Governance Responsibility

The FCA has made clear its expectations regarding diversity and inclusion at regulated firm boards. The regulator expects boards to have target-setting processes for board composition, to report transparently on progress against those targets, and for the Nominations Committee to be the governance body responsible for ensuring that diversity considerations are integrated into the appointment process rather than addressed as an afterthought. The FCA’s diversity and inclusion rules for listed companies and larger regulated firms have formalised this expectation, and the SMF13 holder is the individual most directly accountable for the firm’s compliance with its D&I governance obligations.

This creates a specific capability requirement for the SMF13 appointment. A Chair of the Nominations Committee who does not have experience of structuring appointment processes to attract diverse candidate pools, of managing board composition against diversity targets, and of reporting on D&I governance in a way that meets the FCA’s disclosure requirements is bringing a gap to a regulatory responsibility that has become more prominent and more scrutinised over the past three years.

What Makes a Strong SMF13 Candidate

The SMF13 candidate brief should assess capability across three dimensions. Succession governance experience — direct experience of leading a board-level succession planning process, at a regulated firm or at a comparable governance complexity level, that has demonstrated genuine engagement with succession risk rather than procedural compliance. Ideally the candidate will have led at least one significant executive appointment process as the Chair of the appointing committee, giving them direct experience of what a well-run search process requires.

Regulatory fitness and propriety expertise — an understanding of the FCA’s fitness and propriety standards and of the ongoing monitoring obligations that apply to SMF holders, sufficient to lead the Nominations Committee’s fitness and propriety oversight function with genuine rather than nominal rigour. At dual-regulated firms, this requires familiarity with the PRA’s fitness and propriety expectations as well as the FCA’s, which may be more intensive for certain designations at banks and insurers.

Independence — the SMF13 Chair must be genuinely independent in their oversight of the appointment process. At boards where the CEO has significant influence over NED appointments, the SMF13 Chair’s independence is the primary safeguard against a management-dominated board composition developing over time. A Chair of the Nominations Committee who defers to the CEO on appointment decisions is not providing the governance the designation requires.

The Form A Process for SMF13

The SMF13 designation requires FCA approval via Form A in the same way as other Senior Management Functions. The approval timeline of six to twelve weeks applies, and the candidate must complete the FCA’s fitness and propriety assessment before taking up the SMF13 responsibilities. For candidates with an established FCA approval history in other SMF designations, the Form A for an additional SMF13 designation at the same firm (where they are adding the NomCo chair function to existing committee chair responsibilities) may be processed more quickly. For external appointments where the candidate is new to the firm, the standard timeline applies.

Working with Exec Capital

Exec Capital places Nominations Committee Chairs and board-level NEDs at FCA-regulated firms. We assess SMF13 candidates against their succession governance track record, their regulatory fitness and propriety expertise, and their independence profile — and support the Form A approval process as part of every assignment. Call Adrian Lawrence FCA on 0203 834 9616.

The NomCo’s Role in Board Effectiveness Reviews

The annual board effectiveness review is one of the Nominations Committee’s core governance responsibilities at regulated firms. At listed companies and larger regulated firms, external board effectiveness reviews are a corporate governance code requirement at periodic intervals, and the Nominations Committee is typically responsible for commissioning the review, managing the process, and overseeing the board’s response to the findings. For the SMF13 Chair, the board effectiveness review is both a governance deliverable and a succession planning tool — the review’s findings on the board’s collective capability gaps inform the NomCo’s assessment of what the next NED or committee chair appointment needs to address.

The FCA is increasingly interested in the quality of board effectiveness processes at regulated firms, particularly in the context of Consumer Duty and operational resilience governance. A board effectiveness review that identifies no governance improvement opportunities, that generates no meaningful change in the board’s composition or working practices, or that produces a report that is filed rather than acted upon, is not demonstrating the board self-assessment quality that the FCA expects. The SMF13 Chair should ensure that the board effectiveness review process is genuinely substantive — that it produces honest findings, that those findings are discussed and acted upon, and that the NomCo’s succession planning responds to the capability gaps the review identifies.

Regulatory Expectations on Board Composition and Diversity

The FCA’s expectations on board composition have evolved significantly with its diversity and inclusion supervisory agenda. At in-scope regulated firms, the FCA expects boards to set specific targets for gender and ethnic diversity, to report transparently against those targets, and for the Nominations Committee’s appointment process to demonstrate that diverse candidate pools have been considered seriously rather than token inclusion achieved through a restricted search. The SMF13 Chair is the governance officer most directly accountable for whether this standard is met — they set the tone for how diversity is integrated into the appointment process, and they are the individual who must explain to the FCA, if asked, why a board composition is what it is and what the firm is doing to develop it.

The practical challenge for nomination committees is that genuine diversity in candidate pools at regulated firm board level requires a search approach that goes beyond the established networks that most board-level searches naturally draw on. The talent pool of diverse candidates with the regulatory track record, governance experience, and technical expertise that regulated firm NED appointments require is real but requires active engagement to access. The NomCo Chair’s role is to ensure that the search brief, the search firm briefing, and the longlist assessment criteria are all structured in a way that genuinely expands the candidate pool rather than simply adding diversity as a criterion against which a traditional pool is assessed. Nomination committees led by an effective SMF13 Chair will have a specific diversity plan for each appointment, with sourcing channels that reach beyond established governance networks and assessment criteria that allow diverse candidates to demonstrate their capability against the full range of the role’s requirements rather than against a traditional board experience template.

Adrian Lawrence

Adrian Lawrence FCA is the founder of Exec Capital. He is a Chartered Accountant and holds an ICAEW practising certificate in his own name with over 25 years’ experience operating at C-suite level, Adrian brings direct executive experience to senior search. His background spans private equity-backed businesses, owner-managed companies, and listed environments, giving Exec Capital a practitioner’s understanding of what leadership hires actually require.