Can One Person Hold More Than One SMF? Combining Senior Manager Roles

At a smaller regulated firm, the question comes up almost immediately: does every Senior Management Function need its own person, or can one individual hold several? The answer is that combining functions is both common and legitimate — but it is not unlimited, and getting the structure right matters for how the firm is governed and how the regulator views it. This article sets out when one person can hold multiple SMFs, where the limits lie, and how smaller firms should think about structuring their senior manager appointments.

It is written for founders, boards and compliance leads at authorised firms deciding how to allocate the functions — particularly at the smaller end, where resource is finite and the temptation to concentrate functions is strong. Where a specialist search is the right route, Exec Capital runs FCA and regulated-firm recruitment across the Senior Management Functions, including combined and fractional appointments, as retained searches led personally by the founder.

The Starting Point: Combining Is Allowed

There is no rule that each Senior Management Function must be held by a different individual. At many smaller firms, a single person holds several functions — a chief executive who is also the executive director, a compliance professional who holds both compliance oversight and the MLRO function, a finance leader who is both the chief finance function and a board director. The framework is designed to be proportionate: a small firm is not expected to appoint a dozen separate senior managers it does not need and cannot justify.

What the firm must do is allocate every function that applies to it to a named, approved individual, and be able to show that each holder can genuinely discharge what they hold. SMF Capital’s guide to combining senior manager roles works through the common combinations, and its guide to which SMFs apply at which firm tier explains how the applicable functions depend on the firm’s classification.

Common and Legitimate Combinations

Compliance oversight and MLRO

The most frequent combination is SMF16 (compliance oversight) and SMF17 (MLRO), held by one compliance professional. At a small broker, boutique asset manager or directly authorised adviser, this is often the right and proportionate structure. SMF Capital’s guide to who can be your MLRO or compliance officer sets out the considerations for smaller firms, and Exec Capital runs combined SMF16/SMF17 searches for exactly this.

A board executive holding a functional SMF

A finance director who sits on the board may hold both the chief finance function (SMF2) and the executive director function; a chief executive holds the governing function appropriate to their role. These overlaps are normal: the functions capture different dimensions of the same person’s accountability, and the Statement of Responsibilities records both.

Governing and required functions at a small firm

At the smallest authorised firms, a very small number of individuals may hold all the applicable functions between them. Provided each person can genuinely discharge what they hold and the allocation is clear, this is a legitimate and proportionate structure — indeed, the regime is designed to accommodate it.

Where the Limits Lie

Capacity: can the individual actually do it?

The first limit is practical. A person holding several functions must have the time and capacity to discharge each of them properly. The regulator is entitled to ask whether an individual stretched across too many functions can genuinely own them all. Concentrating functions to save cost, where the holder cannot realistically discharge them, is a false economy and a regulatory risk.

Conflicts: do the functions pull against each other?

The second limit is conflict. Some functions are meant to be independent of others, and combining them undermines that independence. The clearest example is the chief risk function (SMF4), which exists to provide independent second-line challenge to the business — combining it with a first-line business role defeats the purpose. Internal audit, as the third line, is similarly meant to be independent. The firm needs to think about which functions can sit together without compromising the oversight the regime is built on.

Proportionality cuts both ways

As a firm grows, combinations that were proportionate at the start stop being so. A single compliance professional holding both compliance oversight and the MLRO function may be right for a small firm but wrong once the firm’s scale and risk profile grow. SMF Capital’s guide to when to split a combined SMF16/SMF17 role works through exactly that judgement. Reviewing the allocation as the firm changes is part of good governance.

How to Think About Structuring the Appointments

The practical approach is to start from the functions that apply to the firm, decide which can legitimately be combined given capacity and conflicts, and then recruit to that structure — rather than starting from the people available and retrofitting functions onto them. For a small firm, that frequently means a small number of senior managers holding sensible combinations, often with a fractional or part-time arrangement for a function that does not justify a full-time hire.

• Identify every Senior Management Function that applies to the firm given its classification and permissions;
• Decide which functions can legitimately be combined, given each holder’s capacity and any conflicts;
• Keep the independent oversight functions — risk, internal audit — genuinely independent of the business;
• Recruit approvable, fit-and-proper individuals to that structure, full-time or fractional as the role justifies;
• Review the allocation as the firm grows, and split combined roles before capacity or conflict becomes a problem.

Where a function does not justify a full-time hire, a fractional compliance officer or part-time holder can discharge it, provided the arrangement is genuine. Where a function falls vacant and must be covered at short notice, Exec Capital’s urgent SMF appointment service keeps the firm compliant while a permanent appointment is made; SMF Capital’s guide to when interim and fractional SMF appointments work sets out when each is appropriate.

What Combining Functions Means for Recruitment

Deciding to combine functions changes the brief. A combined SMF16/SMF17 role is not simply a compliance job with an AML element bolted on; it asks for a professional who can genuinely own both the firm’s compliance with the regulatory system and its financial-crime framework, and who has the capacity to carry both. A board executive holding a functional SMF alongside a directorship needs the standing to discharge both the governance and the executive accountability. Writing the brief around the combination — rather than around a single title — is what produces a shortlist of people who can actually hold what the firm needs them to hold.

It also changes assessment. Where one individual will hold several functions, the firm has to be confident that each one is genuinely covered — that the holder is not strong on one dimension and thin on another. An assessment that tests only the headline role risks approving someone who cannot discharge the combined accountability. Exec Capital assesses combined-role candidates against each function they will hold, and the shortlist commentary speaks to fitness and propriety for the whole of what they are taking on.

Frequently Asked Questions

Is there a maximum number of SMFs one person can hold?

There is no fixed numerical limit. The constraint is practical and conflict-based: the individual must have the capacity to discharge each function properly, and the combination must not undermine the independence the regime relies on. A firm concentrating functions in one person should be able to justify that the holder can genuinely own them all.

Can the compliance officer also be the MLRO?

Yes — holding both the compliance oversight (SMF16) and MLRO (SMF17) functions is one of the most common combinations at smaller firms, provided the individual has the capacity and expertise to discharge both and no conflict arises. As the firm grows, the functions are often split.

Which functions should never be combined?

Functions that exist to provide independent oversight of the business — the chief risk function and internal audit — should not be combined with first-line business roles, because doing so removes the independence that is the point of those functions. Beyond that, the test is capacity and conflict rather than a fixed prohibition.

Sources and Further Reading

• FCA — Senior Managers and Certification Regime
• FCA Handbook — SUP 10C (FCA senior management functions)
• FCA — SM&CR for solo-regulated firms