Compliance Hiring During an FCA Investigation or Enforcement

When the FCA’s attention moves beyond routine supervision into an investigation, a skilled person review or formal enforcement, the demands on a firm’s compliance and financial-crime function change sharply. The work intensifies, the scrutiny becomes personal, individuals leave or are prohibited, and the firm has to demonstrate — visibly and at pace — that it has the people to put things right. This guide is about the senior hiring and resourcing decisions that arise across that part of the spectrum: during an investigation, through a skilled-person-driven remediation, when a senior manager departs or is banned, and in the rebuild after a Final Notice.

It is the more advanced companion to our guide on interim SMF16/SMF17 cover during an FCA VREQ, which deals with the earlier, supervisory stage. If your situation is a voluntary requirement and an SMF resignation, start there; this guide picks up where matters are more serious or further along. For the terminology and the shape of the whole spectrum, see FCA Supervisory and Enforcement Action Explained. It is written for boards, owners and controllers, general counsel and chief operating officers of FCA-regulated firms, and it is general guidance on the hiring decision rather than legal or regulatory advice — your counsel and any skilled person should lead the regulatory strategy itself.

By the time a firm is in an investigation or facing enforcement, the quality of its compliance and financial-crime people is not a back-office detail. It is part of the firm’s defence and its credibility with the regulator. A firm that can show it has brought in experienced, regulator-recognised people to grip the issues is in a far stronger position than one that is visibly under-resourced, and getting the right people in quickly is one of the few things genuinely within a board’s control at this stage. Our compliance and risk recruitment practice works with firms at every point on this spectrum, from the first supervisory letter to the post-enforcement rebuild.

Why FCA scrutiny drives an urgent hiring need

Three things happen at once when a firm comes under serious regulatory attention, and each creates a resourcing need.

• The workload jumps. Investigations and reviews demand evidence, file reviews, data extracts, remediation plans and regular engagement with the regulator, all on top of business as usual. A compliance team sized for steady-state monitoring rarely has the spare capacity.
• The standard rises. The regulator expects the second line to be led and staffed by people who can credibly grip the issues. A thin or junior function becomes a finding in its own right, and an under-resourced response can make the original concern look worse than it is.
• People leave. The personal accountability that comes with senior compliance roles, and with the Senior Managers and Certification Regime generally, means resignations tend to cluster around exactly these moments. The Head of Compliance or MLRO who has carried the function for years may decide the personal exposure is not worth it.

A firm that does not move quickly to fill the gap and add capacity can find its regulatory position deteriorating for reasons that have nothing to do with the original concern. Missed deadlines, slow responses to information requests and a remediation plan with no named owner all send the wrong signal. The resourcing decision is therefore not something to defer until the outcome of the matter is known; it is part of how the matter is managed.

How the FCA’s enforcement approach has changed

Boards sometimes plan their response around assumptions that are now out of date, so it is worth being clear about where the FCA’s enforcement framework stands. In 2024 the FCA consulted on publicly naming firms under investigation much earlier and more often. After significant pushback from industry and Parliament, it told the Treasury Select Committee in March 2025 that it would not proceed with the broad version of that proposal. In June 2025 it published its final policy in PS25/5 alongside a streamlined, renamed Enforcement Guide (ENFG), which took effect on 3 June 2025.

The practical upshot for regulated firms is that the “exceptional circumstances” test for announcing an investigation into a regulated firm remains in place. The FCA did carve out some narrower situations — for example, naming the subjects of investigations into suspected unauthorised business, reactively confirming an investigation in certain circumstances, and publishing anonymised information about the kinds of cases it is pursuing. For most authorised firms, an investigation will therefore usually stay private until there is an outcome, although firms should still plan for the possibility of publicity and take legal advice on disclosure obligations to clients, counterparties and investors.

That has a direct bearing on hiring. A confidential investigation needs a confidential search. Candidates must be approached discreetly, given enough information to judge the role without the firm’s position leaking into the market, and asked to commit to confidentiality before the detail is shared. The firm’s own staff may not yet know the full picture. A search partner used to handling sensitive mandates matters as much here as candidate quality.

Hiring at the investigation stage

An investigation does not mean wrongdoing has been established, and not every investigation ends in enforcement action. It does mean the firm needs to respond thoroughly and look credible doing so. The resourcing need here is usually twofold.

First, the firm needs senior compliance and, often, financial-crime leadership with the seniority and composure to manage the regulator relationship and the internal response. That person will sit alongside external lawyers, brief the board, coordinate information requests and make sure the firm’s account of events is accurate and consistent. Second, it needs hands to do the work — file reviews, data gathering, lookbacks and remediation scoping — without paralysing the day-to-day business or pulling the existing team off live monitoring.

Bringing in experienced interim resource at this stage is frequently the difference between a controlled, well-evidenced response and a scramble. It also signals to the regulator that the firm is taking the matter seriously and resourcing it properly, which itself shapes the supervisory relationship. Where the current Head of Compliance is staying, an interim deputy or a fractional senior adviser can add depth without disturbing the reporting line; where the incumbent is implicated or leaving, the firm needs someone who can step into the accountable role. If the vacancy is an SMF, our urgent SMF appointment service is designed for exactly that situation.

Resourcing a skilled-person review and the remediation that follows

A section 166 skilled person review is one of the most resource-intensive things a firm can go through. The FCA uses its power under section 166 of the Financial Services and Markets Act 2000 to require a report from an independent skilled person on a specific area of concern, and the firm normally appoints and pays for that skilled person. The FCA explains how it uses the tool on its skilled person reviews page.

Because the skilled person is independent and reports to the regulator, the firm cannot lean on them to do its work. The firm needs its own experienced people to engage with the review, provide evidence, challenge factual inaccuracies and — almost always — deliver a substantial remediation programme afterwards. The remediation is where most of the hiring need sits:

• Senior oversight to own the remediation plan, report progress to the board and the regulator, and make the judgement calls when the plan meets reality.
• File remediation teams — customer due diligence and enhanced due diligence reviewers working through a back book against a defined methodology.
• Transaction-monitoring specialists to recalibrate rules, clear alert backlogs and evidence that the new settings work.
• Framework and policy work — rewriting the financial crime risk assessment, policies and procedures so the fixes are embedded rather than one-off.
• Quality assurance independent of the remediation team, so the firm can show the work meets the standard before the skilled person or the FCA tests it.

Firms routinely need to scale this capacity quickly and then scale it back once the programme is delivered, which makes interim and contract resource the natural model. FD Capital sets out the mechanics of the review itself in its Section 166 Skilled Person Reviews guide; the hiring point is that a review almost always converts into a remediation programme that needs people, fast. A useful discipline is to scope the resourcing alongside the remediation plan rather than after it, so the timetable you commit to is one you can staff.

Replacing a departed or prohibited senior manager

Two distinct situations arise here, and both are urgent. The first is a resignation — a compliance officer or MLRO who steps away under the pressure of a live matter, leaving a function that must be covered immediately. The second, more serious, is where an individual becomes subject to a prohibition order or leaves under a cloud, meaning they cannot continue and the firm must replace them with someone whose fitness and propriety is beyond question.

In both cases the firm needs credible, regulator-acceptable cover quickly — usually an interim to bridge while a permanent appointment and any required approval are arranged. The bar is high: the regulator will look closely at whoever steps into a role vacated in these circumstances, so the replacement’s track record, sector fit, UK presence and clean fit-and-proper position all matter. For a Head of Compliance (SMF16) or MLRO (SMF17) vacancy, the firm should also think about who holds the relevant prescribed responsibilities in the meantime and record that clearly.

Handover is often the weakest point. A departing senior manager may be unavailable, uncooperative or legally constrained, which means the incoming interim has to rebuild the picture from the files, the board papers and the regulator correspondence. Candidates who have stepped into a function mid-matter before know how to do that quickly and know which questions to ask first. This is the same urgent-cover discipline set out in our VREQ guide, applied at a more serious stage.

SMCR rule changes that affect replacement hires

The rules on how quickly a firm must regularise a senior manager vacancy have recently changed, and further change is proposed. Any plan for replacing a departed SMF holder should be built on the current position.

Changes in force since 24 April 2026

The FCA’s first phase of SMCR reforms, set out in PS26/6, took effect on 24 April 2026. Three changes matter most when a senior manager leaves unexpectedly:

• The 12-week rule is now a submission deadline. Where someone covers an SMF role temporarily, the firm now has 12 weeks to submit the application for approval, rather than 12 weeks to have the approval in hand. That removes some of the pressure created by the FCA’s own determination period, but the application still has to be complete and well prepared.
• Criminal record checks last longer. A check obtained for an SMF application is now valid for six months rather than three, and checks are no longer needed for internal or intragroup moves.
• Regulatory references should come back faster. FCA guidance now asks firms to aim to respond to reference requests within four weeks, down from six, which helps shorten the vetting stage of an urgent hire.

None of this lowers the bar for the person. The FCA still expects the candidate to be fit and proper, and a replacement following a prohibition or a contested departure will be looked at closely. Our guide to how long FCA SMF approval takes covers the approval process in more detail.

Proposals under consultation

On 23 October 2026 the FCA published CP26/37, its second-phase SMCR consultation, which closes on 22 January 2027. Among other things it proposes extending the temporary cover period to 18 weeks and dropping the requirement that the absence be “reasonably unforeseen” for FCA functions, removing the certification regime, and cutting back the prescribed responsibilities. These are proposals, not rules: the FCA expects to finalise them in 2027, partly dependent on legislation. Firms should plan against the April 2026 rules today and treat CP26/37 as a likely direction of travel. Our pages on Senior Managers Regime board recruitment and statements of responsibilities for board appointments explain how these accountability documents fit into a senior hire.

Rebuilding a compliance function after a Final Notice

Once an enforcement matter concludes — typically with a published Final Notice and often a remediation requirement — the firm faces a rebuild. The objective shifts from defending the matter to demonstrating durable change: a strengthened second line, refreshed governance, credible permanent leadership and a culture the regulator can have confidence in.

This is where permanent appointments come to the fore. A firm emerging from enforcement often needs a new, senior, demonstrably independent Head of Compliance or MLRO, sometimes supported by a strengthened risk function and board-level change. The hiring brief at this stage is as much about signalling and credibility as capability — the right permanent appointment is part of how a firm shows the regulator, its clients and its counterparties that it has turned the corner.

A rebuild also needs honest thinking about structure. Should compliance and financial crime sit under one leader or two? Does the compliance function have a direct line to the board or risk committee? Is the Chief Risk Officer role needed now, or would it be premature for the firm’s size? Getting those answers right before the search starts produces a better brief and a better hire. Done well, the rebuild is also the bridge back to growth.

What “credible to the regulator” means at this stage

The bar for senior compliance hires rises with the seriousness of the situation. At the investigation and enforcement end, credibility typically means some combination of:

• a strong, recent record in the relevant function and sector;
• direct experience of operating under regulatory scrutiny — investigations, skilled person reviews and remediation programmes;
• for some roles, an ex-regulator background that brings an understanding of how the FCA thinks and what it will test;
• hands-on remediation capability rather than purely advisory experience;
• a clear UK presence and the availability to engage at pace; and
• a clean fitness-and-propriety position, with nothing on the FCA Register or in references that will slow approval.

Candidates who have themselves taken a firm from enforcement or a skilled person review back to a clean supervisory footing are particularly valuable, because they have done exactly what the firm now needs to do. Credibility also has a personal dimension: the board needs someone who will tell it uncomfortable things and hold the line with the business. A candidate who is technically strong but reluctant to challenge is the wrong hire for a firm under scrutiny.

Interim, contract or permanent — matching the model to the stage

Different stages call for different engagement models, and most firms use a mix. Interim senior leaders — an interim Chief Compliance Officer, MLRO or Chief Risk Officer — are the standard answer for the acute phase, when the firm needs credible, accountable leadership immediately and for a defined period. Contract specialists — financial crime analysts, CDD/EDD reviewers and file-remediation teams — provide the surge capacity a skilled person remediation demands, scaling up and then down with the programme. Permanent appointments are the destination, especially for the post-enforcement rebuild, where continuity, independence and credibility matter most.

The skill is in the sequencing: interim leadership and contract capacity to grip and remediate, then permanent appointments to embed the change and signal durability. Running the permanent search in parallel with the interim assignment, rather than after it, avoids the interim drifting on longer than planned and gives the incoming permanent hire a proper handover.

Fractional and interim SMF16/SMF17 cover

For smaller firms — brokers, payment and e-money firms, wealth managers, consumer credit businesses and smaller investment firms — the most common need is not a full-time hire at all. It is reliable cover for the SMF16 compliance oversight and SMF17 MLRO functions, often combined in one person, on a part-time or fixed-term basis. That need becomes acute when the incumbent leaves mid-matter or when the FCA has questioned whether the function has enough senior time.

A fractional compliance officer or fractional MLRO works a set number of days a week or month, holds the accountable role and is approved by the FCA in the normal way. The model works well where the firm’s size does not justify a full-time head but the regulator expects senior, accountable oversight. It is also a sensible bridge: a fractional SMF16/17 can hold the role through an investigation or remediation, and then either continue or hand over to a permanent hire once the firm has grown or stabilised.

The points to check are practical. Does the candidate have enough time for the firm in its current state, which may be more than it will need in a year’s time? How many other mandates do they hold, and would the FCA see their commitments as manageable? Do they have direct experience of the firm’s permission type? A firm under scrutiny should expect to commit more days at the start, and taper as the remediation completes.

What it costs

Cost depends on seniority, scarcity and the intensity of the situation, and it is better calibrated against a specific brief than quoted in the abstract. The main drivers are:

• Accountability. A role that carries an SMF, particularly one vacated in difficult circumstances, commands a premium over an advisory or project role.
• Track record. Ex-regulator backgrounds and proven enforcement or skilled person remediation experience are scarce and priced accordingly.
• Time commitment. A fractional arrangement of one or two days a week costs a fraction of a full-time interim, which is why it suits smaller firms.
• Team size and duration. For remediation programmes, the overall cost is driven by the number of reviewers, the size of the back book and the timetable agreed with the regulator.
• Sector. Some permission types and sectors have a smaller pool of experienced people, which affects both availability and rate.

The cost of not resourcing properly is usually higher: a remediation that overruns, a regulator that loses confidence, or a permanent hire made in haste that has to be unwound. We can give you current market rates for the specific roles you need once we understand the brief.

How quickly can you put people in place?

For urgent cover — a resignation mid-investigation, or a prohibited individual who must be replaced — credible names can often be in front of a board quickly, because they come from an existing network of people we already know rather than a cold search. Remediation teams can be stood up at pace where the requirement is clearly defined. Timings depend on the role, the sector and the candidate’s notice position, so we will give you a realistic view at the outset rather than a fixed promise.

Where formal regulatory approval is needed for a Senior Manager Function, the timeline is governed by the regulatory process rather than the search. Since April 2026 the firm has 12 weeks to submit the application for someone providing temporary cover, so an interim can bridge while the application is prepared and determined. The practical point is that the search itself need not be the constraint; preparing a complete application, with references and checks lined up, is what keeps the overall timetable on track.

How Exec Capital sources the right people at short notice

Speed comes from already knowing the people. Exec Capital maintains a curated network of FCA-experienced compliance, MLRO, financial crime and risk professionals — including approved SMF holders, former regulators, skilled-person-experienced specialists and remediation leads — some of whom are between mandates and available at short notice. When a firm calls with an urgent need, the work is matching and verifying rather than starting cold. In practice that means we:

• Shortlist from a known pool of people with the right approvals, sector background and regulatory-scrutiny experience.
• Check FCA Register status and history before a candidate reaches you, so the fitness-and-propriety story is sound from the outset — particularly important when replacing someone who has left under a cloud.
• Pre-check conflicts, independence and availability up front, so the names you see are genuinely deployable into a sensitive matter.
• Provide leadership and capacity together — an interim or fractional SMF holder to lead, plus the contract remediation resource the programme needs.
• Run interim and permanent in parallel, bridging the immediate gap while building towards the permanent rebuild.
• Handle the search confidentially, with candidates briefed only to the level the situation allows.

Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate. For the wider picture of how we approach compliance, MLRO and risk hiring, see our compliance and risk recruitment page.

Representative examples

The situations below are typical of the kinds of resourcing problems firms bring to us at this stage. They describe common scenarios and the hiring response that usually fits, rather than specific clients.

• Interim leadership during an investigation. A firm under investigation loses its Head of Compliance and needs credible senior cover while it responds to the regulator. The usual answer is an interim with direct experience of managing firms through FCA investigations, able to lead the response and the regulator relationship while a permanent search runs in parallel.
• Surge resource for a skilled person remediation. Following a section 166 review, a firm has to remediate a large book of customer files to an agreed timetable. It typically needs a senior remediation lead, a team of CDD/EDD reviewers and independent quality assurance, scaled down as the work completes.
• Fractional SMF16/17 cover for a small firm. A small broker or payments firm whose combined compliance officer and MLRO resigns during a supervisory review needs an approved-calibre individual for one or two days a week, quickly, with the application submitted within the 12-week window.
• Post-Final-Notice rebuild. A firm emerging from enforcement needs a senior, demonstrably independent permanent Head of Compliance with a record of strengthening functions after regulatory action, often as part of a broader governance refresh.

Frequently asked questions

Can you provide interim compliance cover during an FCA investigation?

Yes. Interim and fractional Heads of Compliance, MLROs and Chief Risk Officers with experience of managing firms through investigations are a core part of our network, and we can usually put credible names in front of a board quickly.

Will the FCA publicly name our firm while it investigates?

Usually not. In 2025 the FCA dropped its broad proposal to name firms under investigation and kept the “exceptional circumstances” test for regulated firms, with some narrow carve-outs. Take legal advice on your own disclosure obligations, and keep the search confidential.

Our MLRO has been prohibited — how quickly can we replace them?

This is an urgent cover situation. We aim to put credible interim or fractional cover in front of you promptly while a permanent appointment and approval are arranged, and we check FCA Register history and fit-and-proper position before introducing anyone.

How long do we have to get a temporary SMF holder approved?

Since 24 April 2026, firms have 12 weeks to submit the application for someone covering an SMF temporarily, rather than 12 weeks to obtain approval. CP26/37 proposes extending this to 18 weeks for FCA functions, but that is not yet in force.

Should we use interim or permanent hires?

Usually both, in sequence: interim or fractional leadership and contract capacity to grip and remediate the immediate situation, then permanent appointments to embed the change. We commonly run both tracks in parallel.

How is this different from interim SMF cover during a VREQ?

A VREQ is the earlier, supervisory stage and is covered in our dedicated guide. This guide deals with investigation, enforcement and post-enforcement stages, including replacing prohibited individuals and rebuilding a function after a Final Notice.

Related Exec Capital resources

• What Is an FCA VREQ? Voluntary Requirements Explained
• MLRO (SMF17) Recruitment
• Interim CRO
• SMF16 vs SMF17: When You Need One, Both or a Combined Role
• FCA-Regulated Firm Recruitment Hub

This guide is general information about the senior recruitment and resourcing decision and does not constitute legal, compliance or regulatory advice. Decisions about an FCA investigation, a skilled person review, enforcement and any regulatory notifications should be taken with your own legal counsel, compliance advisers and skilled person.