Head of Internal Audit Recruitment for FCA-Regulated Firms

Exec Capital recruits Heads of Internal Audit — SMF5 holders — for FCA-regulated firms across the UK. The role sits in the third line of defence, must be substantively independent of both the business and the second-line risk function, and reports primarily to the Audit Committee Chair rather than to the executive line. The candidate pool is dominated by qualified accountants — ICAEW, ACCA, or one of the equivalents — with substantial in-house internal audit experience, and the FCA’s competence and capability assessment looks closely at credentials and methodology depth. We work with asset managers, wealth managers, insurance and brokerage firms, fintechs, payment institutions and consumer credit lenders on permanent and interim Head of Internal Audit appointments.

If you are running an SMF5 search now, planning succession in the next 12-18 months, or considering whether your existing senior auditor should formally take the SMF5 designation, we are happy to discuss the specifics directly. Every SMF mandate is led personally by Adrian Lawrence FCA — and as a Fellow of the ICAEW, the audit-qualified candidate community is one Adrian engages with directly.

What an SMF5 Head of Internal Audit appointment involves

SMF5 is the FCA designation that attaches personal regulatory accountability to the Head of Internal Audit at an FCA-regulated firm. The substantive scope covers the firm’s internal audit framework, the audit plan and its alignment with the firm’s risk profile, the operation of the third line of defence, the relationship with the Audit Committee, and the staffing and capability of the internal audit function.

The role is structurally distinctive from external audit firm partner roles or general assurance work. Internal audit is a continuous in-house function reporting to the Audit Committee Chair (typically SMF11 in Enhanced firms, otherwise the Chair of the Board), with a dotted line to the CEO for administrative purposes only. The substantive distinction matters for who can do the role: candidates moving from external audit firm partner roles into SMF5 need to have made the in-house transition substantively, not just changed firms while retaining an external audit mindset.

For the comprehensive treatment of how to approach an SMF5 appointment — including the three-lines-of-defence framing, the qualifications dimension, the Audit Committee relationship, and common search pitfalls — see our SMF5 Head of Internal Audit hiring guide.

How Exec Capital approaches SMF5 mandates

We structure every SMF5 search around three workstreams running together: candidate identification (with prior SMF5 holders first, then experienced senior internal auditors at peer firms, then specific Big Four director or partner candidates with the right background to clear FCA approval), regulatory pathway preparation (Form A submission, fit-and-proper readiness, regulatory references), and the governance dimension (Statement of Responsibility drafting, Audit Committee Chair relationship, third-line independence).

The work is substantively different from a corporate Head of Internal Audit search. Strong SMF5 candidates evaluate the firm carefully — looking at the audit plan, the resourcing of the function, the strength of the Audit Committee, the working relationship between the SMF5 and the Audit Committee Chair, and any matters in the firm’s recent regulatory history that bear on assurance. Firms that present well on these dimensions attract the candidate seniority the role actually requires.

The candidate pool

The SMF5 candidate pool is structurally narrow. Prior SMF5 holders at peer regulated firms are the strongest signal — typically not actively seeking moves and the most credible candidates are typically known across the market, so discreet introduction is the standard search method. Pure-play internal audit candidates — those whose entire career has been in internal audit, moving through senior auditor and audit manager roles to head-of-function level — bring deep methodology depth and clear FCA competence assessment cleanly. External audit firm transitions — candidates from Big Four or other external audit firms who moved into in-house internal audit at director or senior manager level and progressed to head of function — are appointable where they have made the substantive transition (typically 3+ years operating in-house). Cross-discipline candidates from related areas (qualified risk professionals, controls specialists) can be credible where the firm’s profile fits and the underlying audit methodology depth is demonstrable.

Most SMF5 candidates hold a chartered accountancy qualification — typically ICAEW (ACA), ACCA, or one of the Scottish or Irish equivalents. Many also hold internal audit-specific credentials such as the Certified Internal Auditor (CIA) designation from the Institute of Internal Auditors, or membership of the Chartered Institute of Internal Auditors. Searches that engage candidates 12-18 months before they intend to move see better outcomes than searches that begin only when the firm urgently needs to fill the role.

Permanent and interim appointments

SMF5 appointments are most commonly permanent. The Head of Internal Audit role requires sustained engagement with the audit plan, the Audit Committee, and the audit team — and continuity matters for the function’s effectiveness. Interim Head of Internal Audit arrangements occur during periods of transition: where the previous SMF5 has departed and the firm needs to bridge the gap until a permanent successor can be FCA-approved, or where the firm is undergoing a specific assurance challenge that warrants an experienced interim while permanent succession is planned. Co-sourcing with external audit firms is a complementary arrangement rather than a substitute for the SMF5 holder — it provides specialist capacity to the audit plan but does not discharge the SMF5 designation itself.

For all engagement models, FCA approval is required. The SMF5 holder must be approved before they take up the role, regardless of engagement model.

Indicative timelines

The realistic timeline for a clean SMF5 appointment runs to twelve to twenty weeks from search opening to first day. Typical breakdown: four to six weeks of search and shortlisting (extended where the candidate pool tightness requires deeper market mapping), two to four weeks of selection and offer, four to ten weeks of FCA Form A approval. Searches involving candidates with adverse references or where the firm’s audit function is being substantially restructured can extend beyond twenty weeks.

One specific timeline consideration for SMF5: regulatory references from previous Audit Committee Chairs are particularly important and can take longer to obtain than references from executive sponsors. Building this into the timeline at the start of the search avoids the back-end pressure that affects many SMF5 appointments.

Sectors and firm types we work across

Our SMF5 mandates concentrate in firms required by the SMCR or by good practice to operate a designated internal audit function — typically Enhanced firms (where internal audit is mandatory) and larger Core firms (where the audit function is a board-level expectation regardless of regulatory mandate). We work across asset managers and wealth managers, insurance intermediaries and broker-dealers, fintechs and payment institutions of meaningful scale, consumer credit lenders, and specialised investment firms.

Smaller Core firms and Limited Scope firms may not have a separate internal audit function at all — in those cases, audit responsibility is typically addressed through outsourced arrangements, co-sourcing with an external firm, or risk-based reviews led by the second-line risk function. The SMF5 designation does not apply where there is no in-house internal audit function.

For the broader FCA-regulated firm cluster, see our FCA Regulated Firm Executive Recruitment hub. For the SMF Roles overview, see our SMF Roles guide.

Working with Exec Capital on an SMF5 mandate

Every SMF5 mandate is led personally by Adrian Lawrence FCA. The audit-qualified discipline benefits substantively from being run by someone with direct accounting professional credentials, and Adrian’s ICAEW Fellowship — combined with substantial regulated-firm executive experience — provides the foundation our SMF5 candidate community responds to. We work on a retained basis for SMF5 appointments, and the engagement runs through to the candidate’s first Audit Committee meeting rather than ending at offer acceptance.

For boards beginning Head of Internal Audit succession, appointing an SMF5 for the first time, or considering whether an existing senior auditor should formally take the SMF5 designation, we offer a structured initial conversation that walks through the responsibilities map, the role specification, the Audit Committee Chair relationship and the realistic candidate pool before any formal mandate begins.

Further reading

For the complete treatment of SMF5 appointments — including the three-lines-of-defence framing, the qualifications dimension, the Audit Committee Chair relationship, the FCA approval process, and common search pitfalls — see our SMF5 Head of Internal Audit hiring guide. For the broader SMCR framework, see our SMF Roles guide.

For the related Board roles, see our SMF14 SID hiring guide. For internal audit standards and methodology, see the Institute of Internal Auditors and the Chartered Institute of Internal Auditors. For the FCA’s published guidance on the regime, see the FCA’s SMCR overview.