SMCR Senior Manager Succession Planning

Board succession planning has always been a governance priority for well-run organisations. Under SMCR, it becomes a regulatory obligation with specific procedural requirements, notification timelines and personal accountability implications. An FCA-regulated firm that approaches a Senior Manager Function vacancy without a clear succession plan is not simply exposed to an operational gap — it is exposed to regulatory scrutiny, to the risk of someone performing a controlled function without approval, and to the supervisory damage that comes from being seen to manage governance reactively rather than in advance.

This guide sets out how FCA-regulated firms should approach SMCR succession planning: what the regulatory obligations are, how to map successors against each SMF, how temporary cover works now that the FCA’s Phase 1 reforms have changed the 12-week rule, what a proper handover looks like, how to keep the Management Responsibilities Map and Statements of Responsibilities current, and how the search and approval process should be sequenced to minimise disruption to the firm’s regulatory standing. It also looks ahead to the FCA’s Phase 2 proposals, which would change which roles need pre-approval at all. Where the gap falls in a control function, our compliance and risk recruitment team can usually help on both the interim and the permanent side.

The Regulatory Framework for SMF Succession

The Senior Managers Regime requires an individual to be approved by the FCA (and, at dual-regulated firms, by the PRA) before performing a senior management function. In practice that means a firm must notify the regulator when an SMF holder leaves a role, apply for approval before a new individual takes up an SMF, and keep its records of who is responsible for what up to date. The application is made on Form A, supported by a Statement of Responsibilities and, for a new holder, the firm’s assessment of fitness and propriety. A departing SMF holder is notified on Form C, which should reach the regulator within seven business days of the person ceasing to perform the function.

The gap between a departure and an approved replacement is therefore a period of regulatory exposure. The FCA does not expect firms to operate for long without an approved holder of a required function, and a prolonged vacancy — particularly in functions like CEO (SMF1), Chief Risk Officer (SMF4), Head of Internal Audit (SMF5), Compliance Oversight (SMF16) or Money Laundering Reporting Officer (SMF17) — will attract supervisory attention. The firm’s compliance function and legal advisers should be involved as soon as an SMF vacancy is known about, to advise on notification obligations, the options for temporary cover and the timeline for resolution.

The framework itself has moved in 2026. The FCA’s PS26/6 policy statement and the PRA’s PS12/26 delivered the first phase of the SMCR review, with most changes taking effect on 24 April 2026. For succession planning, three of those changes matter most: the reworked 12-week rule for temporary cover, the move to batched submission of updated Statements of Responsibilities and Management Responsibilities Maps, and the extension of criminal records check validity for SMF candidates from three months to six, with no check needed for internal or intragroup moves. Each is covered below. The wider shape of the regime and its board-level consequences are set out on our Senior Managers Regime board recruitment page.

The Difference Between Planned and Unplanned Succession

SMF succession events fall into two broad categories: planned and unplanned. Planned succession — retirement, the end of a fixed term, a known restructuring — allows the firm to manage the search and approval process with adequate lead time. With six to twelve months of advance notice, a regulated firm can run a thorough search, identify a preferred candidate, submit the Form A application, and have an approved replacement in post before the outgoing SMF holder’s final day. Planned succession is the governance standard the FCA expects regulated firms to be working towards.

Unplanned succession — a resignation at short notice, an unexpected departure, a health issue, or an enforcement action — requires a different response. The firm’s primary obligations in an unplanned succession event are to notify the FCA of the departure promptly, to establish whether temporary SMF cover is available under the Handbook, and to start a permanent replacement search immediately. Firms that wait to see how events develop before starting the search typically find themselves operating without compliant SMF coverage for longer than necessary and with a compressed search timeline that reduces the quality of the eventual appointment.

The distinction now has a sharper regulatory edge. The FCA’s revised guidance on temporary cover gives examples of when the 12-week rule is properly used — an unexpected resignation, sudden illness — and examples of misuse, such as relying on it for a retirement announced a year in advance or a fixed-term contract ending exactly as agreed. In other words, the regulator expects a planned departure to be handled through planned succession. A board that treats a foreseeable exit as an emergency, and leans on temporary cover to buy time, should expect questions.

Temporary SMF Cover: Options and Limitations

The FCA’s rules allow a firm to cover an SMF temporarily, without prior approval, where the absence of the approved holder is temporary or reasonably unforeseen. This is the so-called 12-week rule. Before April 2026 it was a hard ceiling: the covering individual could act for no more than 12 weeks in any consecutive 12-month period, and if the replacement had not been approved by then, the firm was out of time. Because a complete Form A can take the FCA up to three months to determine — longer if the application is incomplete or raises questions — firms were often forced into rushed appointments or awkward reshuffles of responsibility to stay within the limit.

How PS26/6 changed the 12-week rule

PS26/6 turned the 12-week limit from an approval deadline into a submission deadline. Firms now have 12 weeks to submit a valid and complete application for the replacement SMF holder, rather than 12 weeks to secure approval. Provided that application is in within the window, the person providing temporary cover can stay in post until the FCA determines it. The covering individual must still be fit and proper, although the firm’s assessment can take account of the limited period they are expected to serve. The FCA has also confirmed that the Senior Manager Conduct Rules apply to a non-approved person performing an SMF role under this rule, and that a breach of those rules by such a person is reported under SUP 15 as soon as practicable.

The practical effect is significant. The 12 weeks are now the time a firm has to identify its permanent candidate, complete due diligence, obtain the criminal records check and regulatory references, and get a complete Form A to the regulator. That is a tight window for a full external search, which is why the search should start on day one of the vacancy, not after the firm has settled who will cover. It also means the quality of the application matters more than ever: an incomplete submission does not stop the clock.

Who can provide cover

Temporary cover has a further limitation beyond the regulatory one: the individual providing cover must be capable of genuinely exercising the SMF’s responsibilities, not simply holding the designation on paper while the real work continues informally. A temporary SMF holder who is not genuinely engaged in the oversight and decision-making the function requires is creating a compliance fiction that will be apparent to the FCA in any supervisory interaction. The usual options are:

• An existing SMF holder taking on the vacant function alongside their own, where the combination is permissible and the workload is realistic. Our guide to combining senior manager roles covers where this works and where it does not.
• A deputy or certified senior employee stepping up, which works best where succession planning has already identified and prepared that person.
• An interim or fractional SMF holder brought in from outside, typically someone who has previously held the same designation at a comparable firm.

Exec Capital works with experienced executives who have previously held SMF designations and who can provide credible interim SMF cover while a permanent search progresses. Interim cover from a genuinely qualified individual allows the permanent search to be run properly rather than under operational pressure, which tends to produce better appointments. Where the gap is urgent, our urgent SMF appointment service is set up for exactly this situation.

Handover: What SYSC 25.9 Requires

Succession is not complete when the new SMF holder is approved. Under SYSC 25.9, firms within the Senior Managers Regime must take all reasonable steps to ensure that a person taking up an SMF has all the information and material they could reasonably expect to have to perform that function effectively and in line with the regulatory requirements. Firms are expected to have a handover policy, and to keep a record of the steps they took.

In practice, a good SMF handover pack covers the following:

• The incoming holder’s Statement of Responsibilities, and how the role sits on the Management Responsibilities Map.
• Open regulatory matters: correspondence with the FCA or PRA, any section 166 reviews, attestations, outstanding remediation and any commitments made to supervisors.
• Known risks, breaches and incidents in the function’s area, and the status of actions arising from them.
• Key policies, the compliance monitoring plan, committee terms of reference and recent board and committee papers.
• The people: direct reports, certified staff, key third parties and outsourced providers.
• Matters the outgoing holder regards as unresolved or deserving early attention.

Handover is harder in an unplanned exit, which is exactly when it matters most. If the outgoing holder has left abruptly, the firm still has to assemble the material from records, and the incoming person — interim or permanent — should be told plainly where the gaps are. A new SMF holder who takes over without a proper handover is entitled to ask what they are inheriting, and the duty of responsibility means they have every reason to.

Building an SMCR Succession Framework

The most effective SMCR succession frameworks share several characteristics. First, they identify successor candidates for each SMF well ahead of a planned transition — ideally twelve to eighteen months — which allows the firm to assess whether internal successors are development-ready or whether an external search is required. Second, they are reviewed annually as part of the board’s governance calendar, not only when a vacancy is anticipated. Third, they address the approval timeline explicitly, recognising that a well-run search plus a regulatory approval process takes several months at most SMF levels.

Fourth, they consider the dependencies between SMF functions — the impact of a CEO departure on the COO’s role, the relationship between a CFO transition and the audit committee’s oversight, the implications of a new CRO for the risk committee chair’s working relationship. SMF appointments do not happen in isolation, and a succession plan that considers each function independently will miss the knock-on effects of a senior transition on the board’s collective effectiveness.

Fifth, they are documented and formally reviewed by the full board — not simply maintained by the company secretary or the chair as an informal awareness exercise. The FCA expects regulated firms to have genuine succession plans, not a notional awareness that certain individuals might eventually leave.

A succession map by SMF

The simplest way to make a framework usable is a succession map: one line per SMF, showing the current holder, an emergency cover option, a medium-term successor and the realistic route to the permanent appointment. The map should look different for different functions:

• SMF1 Chief Executive. The highest-stakes vacancy. Emergency cover is often another executive director or the chair acting for a short period, but the plan should name a credible interim and set out the search route. If the strongest internal candidate has never held an SMF, factor that into the timeline — our guide to hiring a CEO without previous SMF approval explains what the FCA looks for. For external searches, see CEO of regulated firm recruitment.
• SMF3 Executive Director and SMF2 Chief Finance Function. Usually covered internally in the short term; the map should record who could absorb the prescribed responsibilities attached to each.
• SMF4 Chief Risk Function and SMF5 Head of Internal Audit. Control functions where independence matters. Internal audit is often partly outsourced, so the plan should state whether the provider can supply cover.
• SMF9 Chair and SMF10–SMF14 committee chairs and senior independent director. Board-level vacancies run through the nomination committee. Staggered terms reduce the risk of several chairs falling vacant together.
• SMF16 Compliance Oversight and SMF17 MLRO. Often held by one person at smaller firms, so a single resignation can open two vacancies at once. These are the roles most likely to need outside cover, and the ones where an interim or fractional holder is most commonly used.
• SMF24 Chief Operations and SMF27 Partner (where relevant). Typically lower urgency, but still requiring approval and an updated Statement of Responsibilities.

The map is also the right place to record which prescribed responsibilities would move, and to whom, if a holder left tomorrow. That single exercise usually exposes where the firm is most exposed.

Keeping the Responsibilities Map and Statements of Responsibilities Current

Every SMF change touches the firm’s Statements of Responsibilities and, at firms that need one, its Management Responsibilities Map. A departure reallocates prescribed responsibilities, a temporary cover arrangement changes who is accountable for what, and an appointment requires a new Statement of Responsibilities with the Form A.

PS26/6 eased the reporting side of this. Firms no longer need to send a revised Statement of Responsibilities or Management Responsibilities Map to the FCA every time a significant change happens; submissions can be batched and sent at most every six months, and where several changes have occurred in the period only the latest version needs to go in. What has not changed is the internal obligation. Firms must still update the documents as soon as a significant change occurs, so that at any point the records show who is accountable for each area. The batching relief applies to what goes to the regulator, not to the firm’s own governance.

For succession planning, that means the map should be updated the day temporary cover begins, not six months later when the next submission is due. Our page on Statements of Responsibilities for board appointments covers how these documents shape the brief for a new appointment.

The Search Timeline for SMF Succession

The single most common mistake in regulated firm succession is starting the search too late. Boards frequently underestimate the total elapsed time between the decision to search and an approved individual being in post. An indicative timeline for a well-run senior SMF succession at an FCA-regulated mid-tier firm runs: several weeks from brief to shortlist; a further few weeks for interviews, referencing and choosing a preferred candidate; then the regulator’s determination period. The FCA must decide a complete application within three months of receiving it, and within six months where the application was incomplete when received. Many decisions come sooner, but planning on the statutory period is the prudent assumption.

If there are regulatory complications — material disclosures in the Form A, a regulatory interview, a request for further information — the timeline extends further. At dual-regulated firms, where both the PRA and FCA are involved, the combined process for a PRA-designated SMF adds further time. Firms that begin the search after an SMF departure has been announced, rather than in anticipation of it, are working against this timeline from the start. Our guide to how long FCA SMF approval takes sets out the stages in more detail.

The revised 12-week rule helps here, but it does not remove the pressure. A firm relying on temporary cover now needs its complete application in within 12 weeks, which means the candidate, the due diligence and the paperwork must all be ready inside that window. Two of the Phase 1 changes make that slightly easier: criminal records checks for SMF candidates now remain valid for six months instead of three, and regulatory references are expected within four weeks rather than six.

Fractional and Interim SMF16/17 Cover as the Bridge

Of all the SMF vacancies we see, the compliance oversight and MLRO roles are the ones most often filled by an interim or fractional holder. There are good reasons for that. At many smaller and mid-sized firms SMF16 and SMF17 are held by one person, so a single departure creates a double gap. The roles are specialist and personally accountable, so an internal colleague without the background is rarely a credible stand-in. And for a firm that does not need a full-time head of compliance, a fractional appointment may be the right permanent answer, not just a stopgap.

A fractional or interim holder can do several jobs in a succession event at once:

• Provide genuine oversight from day one, so the firm is not running a compliance function on paper only.
• Take ownership of open regulatory matters and the handover, and identify where the outgoing holder left gaps.
• Help define the permanent brief, which is often different from the one the firm had before.
• Give the board the time to run the permanent search properly — or, where it suits the firm, continue as the approved holder on a part-time basis.

Where the cover will last beyond 12 weeks, the interim or fractional holder needs a Form A of their own, unless the firm’s permanent application is already in. Many firms therefore apply for approval of the fractional holder straight away, which removes the deadline pressure entirely and leaves the permanent decision open. See our fractional compliance officer and fractional MLRO pages for how these appointments work, our SMF16 Head of Compliance recruitment service for the permanent hire, and the interim SMF16/17 cover guide for what supervisors expect while the arrangement runs. For a wider view of the options, our compliance and risk team can talk through interim, fractional and permanent routes together.

What CP26/37 Could Change

On 22 October 2026 the FCA published CP26/37, the second phase of its SMCR review, alongside a PRA consultation. It closes on 22 January 2027. These are proposals, not rules, but several would change how succession planning works if they are adopted:

• Fewer pre-approved roles. For dual-regulated and Enhanced firms, the FCA proposes moving SMF5 (Head of Internal Audit) and SMF10 to SMF15 (the committee chairs, senior independent director and chair of the with-profits committee) from pre-approval to notification. Firms would still need to assess fitness and propriety, but would not wait for regulatory approval before the person starts.
• Removal of SMF18 and SMF22. The FCA proposes removing the Other Overall Responsibility and Local Responsibility functions, with their responsibilities reallocated to other SMFs.
• No routine SoR and MRM resubmission. Firms would no longer send revised documents when responsibilities change, though they would still have to keep them current and produce them on request.
• Removal of the Certification Regime and simplification of the application process, including dropping the requirement for a summary of the handover document.

If adopted, the FCA expects to publish final rules in the first half of 2027, with implementation around six months later. For now, the current rules apply in full: SMF5 and the board committee roles still need approval, and succession plans should be built on that basis. What CP26/37 does signal is a regulator that wants approval effort focused on the most senior executive roles — which, if anything, makes careful planning for SMF1, SMF16 and SMF17 more important, not less.

Internal vs External Succession

The question of whether to promote internally or search externally is a genuine governance question for regulated firm boards, and the right answer varies by firm, by function, and by the specific capabilities required at the point of transition. Internal successors offer continuity, established regulatory relationships and reduced transition risk. External successors offer fresh perspective, different experience and — where the firm is managing a period of challenge — the credibility that comes from an independent appointment that is visibly not a continuation of the previous regime.

From a regulatory perspective, both routes are acceptable. The FCA does not have a preference for internal or external succession, and it applies the same fitness and propriety standard to candidates regardless of whether they are known to the firm. What it does assess is whether the chosen candidate is genuinely fit and proper for the role, including whether they have the competence and capability for its specific responsibilities. An internal candidate who has been groomed for the role, with documented development and exposure to the regulator, usually makes for a stronger application than one promoted in a hurry.

The practical point is that the decision should be made in the succession plan, not in the week the vacancy arises. Where an internal successor is identified, the plan should record what they still need — committee exposure, a period deputising, specific technical experience — and when they are expected to be ready. Where none exists, the board should know that in advance and have an external route lined up.

Working with Exec Capital on SMF Succession

Exec Capital advises FCA-regulated firms on succession for Senior Manager Functions and runs the search when an external appointment is required. We work with boards and nomination committees to test whether the succession timeline is realistic, to establish whether interim or fractional cover is needed, and to define the candidate profile with the regulatory dimension properly built in. Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate. Call us on 0203 834 9616 to discuss your succession challenge.

Frequently asked questions

What happens when an SMF holder resigns without notice?

Notify the FCA of the departure on Form C, decide who will provide temporary cover, update the Statements of Responsibilities and responsibilities map internally, and start the replacement search straight away. Under the revised 12-week rule, a complete application for the replacement must be submitted within 12 weeks for the temporary cover to continue beyond that point.

Does the 12-week rule still exist?

Yes, but it works differently. Since 24 April 2026, firms have 12 weeks to submit a valid and complete application rather than 12 weeks to obtain approval. The covering individual can stay in post until the FCA decides that application, provided the absence was temporary or reasonably unforeseen.

Can temporary cover be used for a planned retirement?

The FCA’s guidance gives a long-planned retirement as an example of misuse. A departure the firm has known about for months should be handled through normal succession, with the replacement approved before the outgoing holder leaves.

Do we still have to send updated Statements of Responsibilities to the FCA?

Yes, but under PS26/6 submissions can be batched and sent at most every six months, with only the latest version needed. The documents must still be updated internally as soon as a significant change occurs. CP26/37 proposes removing routine resubmission altogether, but that is not yet in force.

Is a fractional SMF16 or SMF17 acceptable to the FCA?

Yes, provided the individual is approved, has the time and authority to do the job properly, and the arrangement is reflected in their Statement of Responsibilities. Many smaller firms use a fractional holder as the permanent solution, not only as a bridge.