Chair Recruitment for FCA-Regulated Firms: The SMF9 Brief and What Boards Should Look For

Chair Recruitment for FCA-Regulated Firms: The SMF9 Brief and What Boards Should Look For

Appointing a Chair at an FCA-regulated firm sits within a regulatory framework that shapes the search from the first day of the brief. The role is the SMF9 — the Chair of the Governing Body — under the Senior Managers and Certification Regime. The candidate cannot start in the role until the FCA has approved the appointment through the Form A process. The Chair carries personal regulatory accountability for the board’s effectiveness and for the governance of the firm. The recruitment brief therefore has features that a generic Chair search does not.

This article sets out what makes the SMF9 Chair brief different, what boards should think through when commissioning the search, and what the strongest Chair candidates look like at FCA-regulated firms.

What the SMF9 Designation Carries

The SMF9 designation applies to the Chair of the Governing Body — the most senior non-executive position at the firm. The Statement of Responsibility for an SMF9 Chair typically covers the effectiveness of the board, the appointment and performance of board members, the firm’s overall governance framework, and the working relationship with the regulator at board level.

Three things follow from SMF9 designation. The candidate must pass FCA fitness and propriety assessment covering honesty, competence and financial soundness. The candidate must accept personal regulatory accountability for the activities within their Statement of Responsibility. And the candidate must have sufficient relevant senior experience that the FCA is likely to grant approval through the Form A assessment — typically prior board chair, non-executive director, or senior executive experience at FCA-regulated firms or in adjacent governance contexts.

The Chair of a dual-regulated firm — such as a UK bank or insurer — operates under both PRA and FCA jurisdiction. The PRA’s Senior Managers Regime approval process applies alongside the FCA equivalent, and the Chair may face interviews with both regulators during the approval process at larger or systemically important firms.

What the FCA Looks for in SMF9 Chair Candidates

The FCA’s fitness and propriety assessment for SMF9 Chair candidates covers four broad areas — honesty and integrity, competence and capability, financial soundness, and the capacity to discharge the specific responsibilities of the role. The assessment is more searching for Chair appointments than for some other SMF designations, reflecting the central importance of the Chair to the firm’s overall governance.

Three specific areas of focus recur in FCA assessment of Chair candidates. First, the candidate’s prior governance experience — board chair, NED or senior executive experience at regulated firms or in adjacent contexts where governance, regulator engagement or stakeholder management has been a meaningful dimension of the role. Second, the candidate’s capacity to lead an effective board — including independence of judgement, capacity to challenge the executive team appropriately, and capacity to manage board dynamics in periods of stress or strategic decision-making. Third, the candidate’s understanding of the firm’s specific regulatory and commercial context — the FCA tends to look for Chairs who can demonstrate they understand the firm’s business model, its principal risks and its strategic environment.

Candidates with adverse regulatory history, prior firm enforcement actions, or material financial difficulty can face challenges through the approval process. Candidates whose prior experience is entirely outside regulated FS can also face longer approval timelines as the regulator works through whether the candidate has sufficient relevant background for the role.

The Strongest SMF9 Chair Candidates

Three candidate profiles recur in successful SMF9 Chair appointments.

The first is the experienced regulated FS senior executive moving into non-executive roles. Candidates who have held senior executive positions — typically CEO, CFO or COO — at FCA-regulated firms and who are transitioning into a portfolio of non-executive positions bring directly relevant experience and prior regulator engagement to the Chair role. The fit depends on the candidate’s capacity to step away from executive thinking and to operate in a Chair role rather than in an executive shadow role.

The second is the established FTSE 350 board chair or senior NED with prior regulated FS exposure. Candidates who have chaired listed companies or held senior NED roles at regulated firms bring board leadership experience and the capacity to chair an effective board, alongside the personal stature to engage credibly with regulators and shareholders. The candidate pool here is finite and the most desirable candidates typically hold multiple board roles already.

The third is the senior public sector or quasi-public sector leader transitioning into private sector governance. Former regulators, senior central bank officials, or senior public sector executives sometimes move into Chair roles at regulated firms, bringing deep regulatory familiarity and the credibility of prior regulatory experience. The fit depends on the candidate’s adjustment to private sector commercial dynamics and the specific firm context.

The Chair-CEO Partnership

The working relationship between the SMF9 Chair and the SMF1 CEO sits at the centre of the firm’s governance. The Chair leads the board; the CEO leads the executive team. The partnership between the two determines whether strategic decisions are made well, whether the board provides the right level of challenge and support to the CEO, and whether the firm navigates difficult periods effectively.

The Chair role is fundamentally different from the CEO role even though both sit at the top of the firm. The Chair leads the board’s collective work — running board meetings, managing board dynamics, ensuring the board operates effectively as a group, leading the CEO appointment and performance management process, and engaging with the regulator at board level. The CEO leads the firm’s operations — running the executive team, driving strategy execution, owning the day-to-day management of the business.

The strongest Chair candidates understand this distinction deeply. They are capable of providing strategic challenge and support to the CEO without taking over executive decisions. They have the personal characteristics to chair an effective board — listening, drawing out divergent views, managing dissent, and bringing the board to clear decisions. They understand when to support the CEO publicly and when to challenge in private.

The brief should describe the existing CEO’s working style, the board’s recent dynamics, and the type of Chair-CEO partnership the firm is looking to build. Candidates evaluate this carefully and the brief that omits the partnership dimension loses credibility quickly.

What Boards Should Look For: Five Practical Criteria

Board leadership track record. Has the candidate previously chaired a board or held a senior NED role where they were materially involved in the board’s leadership? Chairing an effective board is a learned discipline and candidates without prior board leadership experience face a steep learning curve. Boards should look for candidates with a track record of leading boards effectively, ideally including some experience of leading the board through a difficult period.

Regulator engagement experience. Has the candidate engaged with the FCA, PRA or equivalent regulator in a meaningful way during prior roles? Specific examples of how the candidate has handled regulator engagement during periods of supervisory focus, regulatory change or enforcement matters are worth probing. Candidates with strong regulator engagement experience bring something to the brief that purely commercial candidates do not.

Independence of judgement. Does the candidate demonstrate the personal capacity to form independent views and to challenge the executive team appropriately? This is a soft criterion but it sits at the heart of what makes a Chair effective. References from prior board roles often surface this dimension if the right questions are asked.

Stakeholder management capability. Does the candidate have the capacity to engage with shareholders, regulators, employees and other stakeholders as the senior representative of the firm? The Chair is often the public face of the firm in difficult moments and the personal characteristics that make this work — composure under pressure, communication clarity, gravitas — are worth weighting heavily.

Cultural fit with the firm’s specific environment. A FTSE 100 bank Chair role and a sub-£500m AUM asset manager Chair role both involve chairing an FCA-regulated firm board, but the cultural environments are entirely different. The strongest Chair appointments come from candidates whose personal characteristics fit the specific firm rather than from generically strong candidates who fit a generic profile.

Brief Construction and Search Timeline

The SMF9 Chair brief should be more detailed than a commercial Chair brief. It should set out the Statement of Responsibility scope, the firm’s current regulatory context, the existing board composition, the CEO working style, the strategic priorities the new Chair will be expected to engage with, the time commitment expected, and the fee structure. The brief should also address succession context — is this a planned succession with a clear handover, or is the role being filled following an unexpected departure with corresponding pressure on the timeline?

Search timelines for SMF9 Chair appointments are typically 12 to 18 weeks from brief to offer. Total timeline from search commencement to the new Chair being in role is typically six to nine months once Form A is factored in. At dual-regulated firms the timeline is often longer, with PRA and FCA approval processes adding additional time.

Most senior Chair appointments at FCA-regulated firms run through a retained executive search process. The combination of regulator engagement, confidentiality, the long approval timeline, and the depth of candidate assessment does not fit a contingency engagement.

Board Effectiveness and Succession Planning

Boards that approach Chair recruitment as part of a wider board effectiveness review and succession planning exercise often produce stronger appointments than boards that treat Chair recruitment as a discrete event. The Chair role does not exist in isolation — it sits within a board composition that includes the Senior Independent Director (SMF14), the committee chairs (SMF10–SMF13), and the other Non-Executive Directors.

The strongest Chair appointments often follow a board effectiveness review that identifies the specific gaps and the specific characteristics the new Chair needs to bring. This sometimes leads to broader board refresh decisions — appointing a new Audit Committee Chair, refreshing the NED bench, or addressing diversity gaps — alongside the Chair appointment itself.

Succession planning for the Chair role is one of the most important governance disciplines at regulated firms. The Chair appointment is one of the few that the board itself owns rather than the CEO, and the quality of the appointment depends on the board’s preparation. Boards that have actively thought about succession for 12 months before the Chair transition typically produce stronger outcomes than boards that begin the conversation when the current Chair announces a departure.

Common Pitfalls in SMF9 Chair Recruitment

Three patterns recur in Chair searches that do not deliver as planned.

The first is appointing a CEO-style profile to a Chair role. Strong commercial CEOs do not always make strong Chairs. The capacity to lead a board, to provide challenge without taking over executive decisions, and to operate through influence rather than authority is a different skill set from executive leadership. Boards that appoint a CEO profile to a Chair role often find the executive team’s relationship with the Chair becomes difficult within the first 12 months.

The second is under-investing in the chemistry dimension. The Chair-CEO partnership and the Chair-board dynamics determine whether the appointment succeeds. Searches that focus on candidate capability and skip the chemistry assessment regularly produce appointments that struggle on integration.

The third is treating Chair recruitment as an event rather than as part of an ongoing board effectiveness process. The Chair role is the most important governance appointment a regulated firm makes. Boards that approach the search with the discipline appropriate to the importance of the appointment — proper succession planning, structured board effectiveness review, careful brief construction, retained search engagement — produce meaningfully better outcomes than boards that approach Chair recruitment as a one-off project.