SMF Salary Guide: Senior Management Function Pay Benchmarks 2026

SMF Salary Guide: Senior Management Function Compensation and Package Structure

The Senior Managers and Certification Regime (SMCR) imposes personal regulatory accountability on the individuals who hold Senior Management Functions at FCA-regulated firms. That accountability — and the career, regulatory and reputational consequences that flow from it — is the defining characteristic of SMF compensation at UK regulated firms, and it is what distinguishes a salary guide for an SMF holder from a general executive salary guide.

This guide covers pay and package structure for every designated Senior Management Function, from SMF1 (Chief Executive) through to SMF24 (Chief Operations). It also covers the NED and committee chair SMF designations (SMF9–14), where compensation structures are materially different from executive SMF roles, and the control function designations (SMF4, SMF5, SMF16, SMF17) where the regulatory independence requirements of the role create specific compensation considerations.

The figures in this guide come only from public sources we have checked and link to: the ONS Annual Survey of Hours and Earnings (ASHE), published recruiter salary guides and the High Pay Centre’s analysis of FTSE 100 chief executive pay. Where no reliable public figure exists for a function, we say so and explain how pay for that role is usually structured instead. The guide covers the UK regulated financial services market across firm types — banks, insurers, asset managers, wealth managers, payment institutions and other FCA-authorised businesses. Every search is run by our specialist team, with Adrian Lawrence FCA, an ICAEW Fellow, overseeing each mandate. Call 0203 834 9616 to discuss a specific SMF appointment or salary question.

If you run a smaller firm and need a compliance oversight holder or MLRO for a day or two a week, go straight to the section on fractional and part-time SMF16 and SMF17 below, which explains how day rates, retainers and cover arrangements are put together. If you are hiring a permanent Head of Compliance, our SMF16 Head of Compliance recruitment service covers the full search and the Form A process.

What Makes SMF Compensation Different

Before examining role-by-role pay, it is worth understanding the structural factors that distinguish SMF compensation from general executive pay. These factors apply across all SMF designations and explain why direct comparison with unregulated executive roles at equivalent seniority levels consistently underestimates the complexity of SMF appointments.

Personal regulatory accountability — SMF holders are individually accountable to the FCA and, where relevant, the PRA for the activities within their designated responsibilities. This accountability extends beyond the firm’s regulatory relationship to include the individual’s personal regulatory record, their ability to obtain approval at future employers, and in some cases their personal criminal liability. Candidates are aware of this and it is reflected in their compensation expectations.

The Duty of Responsibility — under section 66A of FSMA 2000, SMF holders can be held personally liable by the FCA for regulatory failures that occurred in their area of responsibility unless they can demonstrate they took all reasonable steps to prevent the breach. The Duty of Responsibility is not merely a theoretical risk — the FCA’s enforcement record shows it is willing to pursue individuals — and candidates price this risk into their compensation expectations, particularly for control function SMFs where the risk of enforcement action is highest.

Form A approval — the regulator must decide a complete SMF application within three months of receiving it, as the FCA’s guidance on applying for SMF approval sets out. The FCA has also set a target of completing at least half of senior manager applications in 35 days or fewer, with a proposed statutory deadline of two months. The process involves assessment of the individual’s fitness and propriety, regulatory references from previous employers and, in some cases, an interview. The gap between offer and start date that this creates, and the ongoing obligation to maintain regulatory standing, is reflected in compensation expectations at the point of appointment.

Regulatory reference portability — SMF holders’ regulatory references follow them throughout their careers. A regulatory finding against an SMF holder is not merely a reputational issue — it is a matter that must be disclosed to future employers and that can fundamentally affect an individual’s ability to obtain further SMF approval. The permanence of this record is a genuine risk that experienced candidates factor into their compensation when considering regulated firm appointments.

What Public Pay Data Shows, and What It Doesn’t

Anyone searching for an SMF salary quickly finds that the official statistics stop short of the roles that matter. The FCA and PRA publish no pay data for approved persons, and the ONS classifies jobs by occupation rather than by regulatory designation. That leaves three kinds of public evidence, each useful for a different purpose.

ONS Annual Survey of Hours and Earnings

The ONS ASHE Table 14 reports earnings by four-digit occupation code. It is the most reliable whole-economy pay source in the UK, but there is no SMF code, and the occupations that SMF holders fall into also contain many people in smaller, non-regulated or more junior jobs. The SOC 2020 coding index shows where the relevant job titles sit: “head of compliance”, “director, compliance” and “officer, compliance, chief” are coded to 2482 (Quality assurance and regulatory professionals), while “officer, risk, chief” and risk managers are coded to 2440 (Business and financial project management professionals). Compliance titles are not coded to 2433, which is Actuaries, economists and statisticians, and SOC 2020 has no unit group 3562.

Source: ONS ASHE 2026 provisional, Table 14.7a, UK full-time employee jobs. The gap between these numbers and the recruiter figures below is the point: ASHE tells you what the broad occupation earns, and SMF holders sit in the top tail of it. Use ASHE to sense-check internal grading, not to price a senior regulated appointment.

Recruiter salary guides

Recruiter guides are narrower but closer to the market for senior regulated roles, because they are built from live placements and candidate data. Two published 2026 guides give figures we could open and check. The Hays UK Salary & Recruiting Trends 2026 (Accountancy & Finance) reports base salary excluding bonus and benefits, split by region and, for risk and compliance, by financial services versus commerce and industry. Morgan McKinley’s 2026 Legal, Risk & Compliance permanent salary guide reports London base salaries in three experience bands (0–3 years, 3–5 years and 5+ years). Neither publishes an “SMF” line, so the role titles are the nearest equivalents, and both are London-weighted.

Listed company reports and regulatory disclosures

At the top of the market, pay is disclosed rather than surveyed. Listed banks and insurers publish a directors’ remuneration report covering their executive directors, who are typically their SMF1 and SMF2 holders. The High Pay Centre’s annual review of FTSE 100 chief executive pay found median total pay of £5.06m in 2025/26 across the whole index. Below board level, banks publish aggregate remuneration for material risk takers in their Pillar 3 disclosures, and investment firms publish remuneration information under the MIFIDPRU disclosure rules. These totals are aggregated across groups of staff, so they show the shape of pay (fixed versus variable, deferred versus upfront) more reliably than the pay of any one SMF holder.

SMF Pay by Function: Summary Table

The table below lists each function with the nearest public pay figure we could verify and how pay for the role is usually structured. Where the second column says “no verified public figure”, that is deliberate: we would rather tell you the data does not exist than print a range nobody can check. For a fuller picture of how the functions fit together, see our SMF roles guide.

All recruiter figures are base salary and London unless stated. Regional figures in the same guides are materially lower: Hays’ South of England financial services Head of Compliance/Risk range is £85,000–£130,000 (typical £110,000).

SMF1 — Chief Executive Function

The Chief Executive Function (SMF1) is the most senior executive designation under SMCR and the one where the gap between the regulated firm and unregulated market is most significant. SMF1 CEOs carry personal accountability for the totality of the firm’s regulatory compliance and are the FCA’s primary point of contact when supervisory issues arise.

Public data gives only the outer markers. ONS ASHE 2026 provisional data shows a full-time median of £95,516 for chief executives and senior officials across the whole economy (SOC 1111), with the 75th percentile at £163,111 — a population that includes chief executives of small companies, charities and public bodies. At the other end, the High Pay Centre found median total pay of £5.06m for a FTSE 100 chief executive in 2025/26, an index that includes the largest UK banks and insurers. Most SMF1 appointments sit between those markers, and where a given role lands depends on firm size, whether the firm is dual-regulated, how it is owned (listed, private equity-backed, mutual or founder-owned) and how much of the package is variable. No public source isolates regulated-firm CEO pay, so we do not publish an SMF1 range of our own. Our CEO of a regulated firm recruitment page covers how these searches run.

A first-time SMF1 appointment — where an individual moves from a non-SMF executive role to a CEO designation at a regulated firm — usually comes with a step up in pay, reflecting both the increase in seniority and the regulatory accountability that SMF1 carries. How large that step should be is a matter for negotiation; the evidence on it is anecdotal rather than published.

SMF2 — Chief Finance Function

The Chief Finance Function (SMF2) is the CFO designation at FCA-regulated firms. SMF2 holders carry personal accountability for the accuracy of the firm’s financial reporting to the FCA and the board, for the effectiveness of the firm’s financial controls, and for meeting the regulator’s capital adequacy notification requirements.

The broad ONS occupation for financial managers and directors (SOC 1131) shows a full-time median of £80,000 and a 75th percentile of £133,539, but that group includes finance managers well below board level. The Hays 2026 guide is closer to the SMF2 market: for London large organisations it reports Group FD/CFO base salaries of £300,000–£500,000 (typical £325,000) and Financial Director salaries of £180,000–£300,000 (typical £225,000). Those figures cover all sectors rather than regulated firms only, and exclude bonus. Our CFO salary guide covers finance director pay outside financial services in more detail.

At the group CFO level of a major UK bank or insurer, pay is disclosed in the directors’ remuneration report and sits well above the market for smaller regulated firms. That reflects scale rather than being representative of the regulated firm CFO market as a whole, and it is a poor anchor for a CFO search at a mid-sized broker, lender or investment firm.

SMF3 — Executive Director Function

The Executive Director Function (SMF3) applies to executive directors who sit on the board of an FCA-regulated firm but do not hold one of the named functional designations such as SMF1, SMF2 or SMF24. The SMF3 typically covers functional heads — Heads of Business Lines, Regional CEOs, Executive Directors responsible for a significant activity — who have board representation and whose responsibilities require FCA designation.

SMF3 compensation is highly context-dependent, reflecting the diversity of roles that fall under this designation. At banks and larger financial institutions, an executive director with SMF3 designation is paid in line with the commercial significance of the business unit they lead, and the package will look much like a divisional chief executive’s. At smaller regulated firms where the SMF3 is a senior functional head with board responsibility rather than a divisional CEO equivalent, pay tracks the functional market for that discipline. We have not found a public data source that reports SMF3 pay as a category, so the right comparator is the functional role itself.

SMF4 — Chief Risk Function

The Chief Risk Function (SMF4) is the Chief Risk Officer designation at regulated firms. SMF4 holders carry independence obligations that are unusual in the C-suite context — the CRO must be independent of the business lines they oversee, which has implications for both the governance structure of the risk function and the CRO’s position within the firm’s remuneration framework.

The FCA and, for dual-regulated firms, the PRA place significant supervisory weight on the effectiveness of the CRO function. A CRO who is perceived as insufficiently independent, who is not receiving adequate board attention, or whose risk framework is not consistent with the firm’s risk appetite will attract regulatory attention during supervisory engagement. This supervisory visibility supports premium compensation for strong SMF4 candidates.

Morgan McKinley’s 2026 guide reports London Head of Risk salaries of £120,000–£150,000 for 0–3 years’ experience, £140,000–£170,000 for 3–5 years and £170,000–£220,000 for five or more. Hays reports a London financial services Risk and Compliance Director range of £150,000–£230,000 (typical £185,000). A group CRO at a dual-regulated bank or life insurer sits above these ranges, and listed firms disclose that pay where the CRO is on the board. Interim SMF4 appointments are priced on a day rate; we have not found a published, checkable day-rate survey for interim CROs, so we do not quote one. Our Chief Risk Officer recruitment team can talk through current rates for a specific brief.

SMF5 — Head of Internal Audit Function

The Head of Internal Audit Function (SMF5) is the third-line assurance designation at regulated firms. Like the SMF4 CRO, the SMF5 carries independence obligations — the Head of Internal Audit is expected to report to the Audit Committee Chair (SMF11) and must have the organisational independence to pursue audit findings without commercial interference.

The Hays 2026 guide reports London internal audit Head of/Director salaries of £140,000–£250,000 (typical £178,000), across sectors. Regional ranges are lower — Scotland, for example, is £90,000–£160,000 (typical £116,000). Heads of internal audit at banks and insurers covering several business lines and jurisdictions sit at the upper end. Note that both the FCA’s CP26/37 and the PRA’s CP14/26 propose moving SMF5 from pre-approval to notification. The accountability stays the same, so we would not expect that change on its own to move pay.

SMF9 — Chair Function

The Chair Function (SMF9) is the only NED designation that explicitly includes a leadership accountability — the Chair is responsible for the effective functioning of the board, for the quality of information the board receives, and for the overall governance standard of the regulated firm. Unlike the executive SMF designations, SMF9 compensation is fee-based rather than salary-based, reflecting the non-executive nature of the appointment. Chairs do not normally receive a bonus, because performance-linked pay would compromise their independence.

Chair fees at listed banks and insurers are disclosed in their annual reports. Below that level we have not found a public survey of chair fees at regulated firms that we could verify, so we do not print a range. In practice the fee moves with the size of the firm, whether it is dual-regulated, the expected time commitment and whether the firm is in a period of change, such as a remediation programme or a sale. Our Chair of a regulated firm recruitment page sets out how those searches run.

Many Chairs hold portfolios of several NED and chair roles at once, and the total income from a portfolio of regulated firm roles can significantly exceed what any individual fee would suggest. The market for experienced regulated firm Chairs is constrained by a limited supply of individuals with the specific combination of financial services experience, regulatory credibility and governance capability that the role requires, which supports fee levels for the strongest candidates.

SMF10, 11, 12, 13 — Committee Chair Functions

The four committee chair functions cover the Risk Committee (SMF10), Audit Committee (SMF11), Remuneration Committee (SMF12) and Nominations Committee (SMF13). These are NED-level designations carrying the specific governance accountability of the committee they lead, in addition to their general NED responsibilities.

Committee chairs are normally paid a base NED fee plus a supplement for chairing the committee. The supplement reflects the meeting cadence and the work between meetings. Risk Committee Chair (SMF10) roles involve regular engagement with the CRO function and, at dual-regulated firms, with the PRA and FCA, and are among the most demanding committee roles at complex firms.

Audit Committee Chair (SMF11) roles carry accountability for the quality of financial reporting, the external audit relationship and the independence of internal audit, which makes this one of the more demanding committee chair roles in governance terms. It is usually the committee chair role most likely to require a recent and relevant financial background.

Remuneration Committee Chair (SMF12) roles usually have a lighter meeting cadence than the Audit and Risk committees, but at firms subject to the more detailed remuneration codes (the dual-regulated code, MIFIDPRU, the AIFM and UCITS codes or the Solvency II rules) the SMF12 accountability is substantially more demanding and the supplement reflects this.

Nominations Committee Chair (SMF13) roles are often quiet in the absence of active board succession, then become much heavier during a CEO or Chair succession, where the time commitment can be equivalent to a significant part-time executive role. CP26/37 proposes that SMF10 to SMF15 at enhanced and dual-regulated firms become notified rather than pre-approved roles. We have not found verified public fee data for any of these committee roles below listed-company level, so this section describes structure only.

SMF14 — Senior Independent Director Function

The Senior Independent Director Function (SMF14) carries the specific governance accountability of the SID role — acting as a sounding board for the Chair, leading the Chair’s performance appraisal, and providing an alternative escalation point for shareholders and regulators. SID fees are typically incremental to the individual’s base NED fee, reflecting the additional accountability rather than a wholly separate fee structure.

The size of the SID supplement depends on the size and complexity of the firm and the specific governance responsibilities the SID is expected to discharge. At firms where the SID has a particularly active governance role — for example, where there is shareholder concern about the Chair’s independence or where a CEO transition is under way — the time commitment and compensation may be substantially higher during the relevant period.

SMF16 — Compliance Oversight Function

The Compliance Oversight Function (SMF16) is the Head of Compliance or Chief Compliance Officer designation at FCA-regulated firms. SMF16 holders carry personal accountability for the effectiveness of the firm’s compliance framework, and their individual regulatory record is assessed by the FCA in the context of any regulatory failings in the firm’s compliance function during their tenure.

Two published 2026 guides give checkable figures. Hays reports a London financial services Head of Compliance/Risk range of £130,000–£200,000 (typical £160,000), with a Risk and Compliance Director at £150,000–£230,000 (typical £185,000); in the South of England the Head of Compliance/Risk range is £85,000–£130,000 (typical £110,000). Morgan McKinley reports London Head of Compliance salaries of £100,000–£120,000 for 0–3 years’ experience, £120,000–£150,000 for 3–5 years and £150,000–£300,000 for five or more. Higher pay goes to candidates with specific regulatory expertise — dual-regulated experience, a Consumer Duty implementation track record, or experience of responding to FCA enforcement — and to roles covering complex environments such as CASS, financial crime and operational resilience.

Chief compliance officer salary

“Chief compliance officer” is usually the title for the same SMF16 role at a larger or group-level firm, sometimes with a team of heads of compliance beneath it. In the ONS coding index the title sits in SOC 2482, where the full-time median is £52,073 — a figure that says more about the breadth of that occupation, which includes quality assurance and regulatory staff across all industries, than about chief compliance officers at regulated firms. The recruiter figures above are the better guide, with group-level chief compliance officers at large banks and insurers above them. For the hiring process itself, see our Chief Compliance Officer recruitment page.

SMF17 — Money Laundering Reporting Function

The Money Laundering Reporting Function (SMF17) is the MLRO designation at FCA-regulated firms. The MLRO carries personal criminal liability exposure — including the offence of failing to disclose under section 331 of the Proceeds of Crime Act 2002 — that goes beyond the civil regulatory sanctions that apply to other SMF holders. This liability profile increasingly influences MLRO compensation expectations.

Morgan McKinley’s 2026 guide reports London MLRO salaries of £90,000–£120,000 for 0–3 years’ experience, £120,000–£150,000 for 3–5 years and £150,000–£300,000 for five or more, with deputy MLROs at £70,000–£90,000, £90,000–£110,000 and £110,000–£150,000 respectively. Hays reports a London financial services Financial Crime Manager range of £98,000–£150,000 (typical £136,000). Pay is highest at firms with significant AML complexity — banks, wealth managers with complex beneficial ownership structures and firms with high transaction volumes. Fractional MLRO arrangements at smaller firms are priced as a day rate or retainer; see the fractional section below and our fractional MLRO service.

SMF24 — Chief Operations Function

The Chief Operations Function (SMF24) is the COO designation at regulated firms. It applies at dual-regulated firms and enhanced solo-regulated firms, and its importance has grown with the regulators’ focus on operational resilience as a board-level governance matter. SMF24 holders carry accountability for the firm’s operations and technology, including its ability to deliver important business services through disruption under the FCA’s operational resilience rules (PS21/3) and, for groups with EU entities in scope, the EU Digital Operational Resilience Act, which has applied since January 2025.

We have not found a public survey that reports COO pay at regulated firms separately, so this guide does not quote an SMF24 range. Pay generally follows the COO market adjusted for the scale of the operations and technology estate, and is highest at payment-heavy banks, firms with complex technology infrastructure and large insurance groups. Our COO salary guide covers the wider COO market.

What Drives an SMF Pay Premium

Ask a remuneration committee why an SMF role costs more than an equivalent unregulated one and the answer usually comes down to risk transfer. The individual takes on personal exposure that a non-approved executive does not, and the market prices it. No public source measures the size of that premium, but the factors behind it are clear.

• Personal regulatory accountability. An SMF holder has a Statement of Responsibilities and can be sanctioned personally for breaches of the conduct rules. That record follows them from firm to firm.
• The Duty of Responsibility. Under FSMA section 66A the regulator can act against a senior manager where a breach occurred in their area and they did not take the steps a person in their position could reasonably be expected to take. Candidates weigh the state of the firm they are joining — an open remediation programme or a skilled person review raises the price.
• D&O insurance. Experienced candidates ask about directors’ and officers’ cover before they accept: the limit, whether it responds to regulatory investigations and interviews as well as claims, whether defence costs are advanced, and how long run-off cover lasts after they leave. Weak cover is usually solved with better insurance rather than more pay, but it shows up in negotiations either way. Fractional SMF holders should check whether the client firm’s policy covers them as an officer and whether their own professional indemnity cover fills any gap.
• Pre-approval and time to start. Pre-approved roles carry an approval risk and a delay. Candidates who already hold approval for the same function at a similar firm are scarcer and usually command more.
• Independence of control functions. For SMF4, SMF5, SMF16 and SMF17, variable pay cannot be tied to the revenue of the areas they oversee. That pushes the package towards fixed pay and can make the base salary look high next to business-line peers.
• Scarcity at the right scale. The number of people who have held a given SMF at a firm of the right size and type is small. A wealth manager hiring an SMF16 with CASS and Consumer Duty experience is fishing in a much smaller pool than one hiring a compliance manager.

NED Fees at FCA-Regulated Firms

Non-executive director fees at FCA-regulated firms reflect both the governance responsibilities of the NED role under SMCR and the specific committee chair supplements outlined above. A NED who does not hold a committee chair designation is normally paid a single annual base fee, with no bonus or share-based incentives. Fees at listed firms are disclosed in their annual reports; for unlisted regulated firms there is no verified public survey we can point to, and our guide to non-executive director fees in the UK covers how NED fees are set across the wider market.

Regulators expect NEDs to spend adequate time on their regulated firm responsibilities, and the expected number of days should be stated in the letter of appointment, with substantially more for committee chairs. That expectation means experienced NEDs are selective about which boards they join. The combination of fee levels, governance learning and network value makes a NED portfolio at good quality regulated firms an attractive proposition for individuals with appropriate experience.

SMF Pay by Firm Type

The same SMF number can mean very different jobs, and pay follows the job. The main differences by firm type are which regulator approves the role, which remuneration code applies and how complex the regulatory perimeter is.

Banks and building societies

Banks and building societies are dual-regulated, so SMF1, SMF2, SMF4 and SMF24 are approved by the PRA with FCA consent, and remuneration is governed by the dual-regulated firms’ Remuneration Code (SYSC 19D) and the PRA rulebook. Material risk takers, including SMF holders, are subject to deferral and payment-in-instruments rules (see the remuneration section below), and banks disclose aggregate MRT pay in their Pillar 3 reports. Pay is highest here for most SMFs, especially at systemically important groups, though small banks and building societies benefit from proportionality rules that switch off much of the deferral regime.

Insurers

Insurers are also dual-regulated and add their own functions — SMF20 Chief Actuary and SMF23 Chief Underwriting Officer (see our guide to the insurance senior manager functions). Remuneration is governed by the Solvency II remuneration requirements rather than the banking code. Lloyd’s managing agents and London market carriers compete for the same specialist underwriting and actuarial talent, which shapes pay for SMF20 and SMF23 in particular.

Asset managers

Asset managers are solo-regulated by the FCA. Depending on their permissions they sit under the MIFIDPRU Remuneration Code, the AIFM Remuneration Code or the UCITS Remuneration Code, and some groups are subject to more than one. Variable pay is a larger share of the package than at banks, and carried interest or co-investment features at private markets managers. The FCA’s CP26/27 proposes replacing those three codes with a single code (see below), which would change how deferral is set at these firms.

Wealth managers and IFAs

Wealth managers and financial advisers are solo-regulated, and most are core or limited scope firms under SMCR. Smaller firms often have the SMF16 and SMF17 held by the same person, or by a director who also holds SMF3, and this is where fractional arrangements are most common. Larger discretionary managers with CASS permissions hire full-time SMF16 and SMF17 holders and pay towards the London financial services ranges above.

Payment and e-money institutions

Payment institutions and e-money institutions authorised under the Payment Services Regulations 2017 and the Electronic Money Regulations 2011 are outside SMCR, so they have no SMF holders. They still need a nominated officer for money laundering reporting and, where appropriate to their size, an officer responsible for compliance with the money laundering regulations under regulation 21 of the Money Laundering Regulations 2017, and the FCA assesses the people who manage them. Pay for the head of compliance and MLRO at a payments firm follows the same market as SMF16 and SMF17 — candidates move between the two — but there is no Form A or Duty of Responsibility. Our page on senior hiring at payment institutions explains how those appointments differ.

Cryptoasset firms

Cryptoasset firms are currently registered with the FCA for money laundering purposes. Under the new authorisation regime, the FCA’s application period runs from 30 September 2026 to 28 February 2027, and authorised crypto firms will come within SMCR, which means SMF1, SMF16 and SMF17 approvals for the first time at many of them. Demand for people who have held these functions at regulated firms is therefore rising in this sector ahead of the regime starting. See our crypto firm SMCR board guide for the governance side.

Fractional and Part-Time SMF16 and SMF17: How Day Rates Are Structured

Most of the SMF16 and SMF17 enquiries we see come from small and mid-sized firms that need an approved compliance oversight holder or MLRO but not a full-time one: IFAs and wealth managers, insurance and credit brokers, consumer credit lenders, investment firms and start-ups going through authorisation. The individual is still approved by the FCA through Form A and still carries the full accountability of the function. What changes is how the time is bought and how the cost is structured. Our fractional compliance officer service and our part-time MLRO service cover these appointments.

Days per month

A fractional engagement starts with a time commitment, expressed as days per week or days per month. The right number comes from the workload, not from the budget: the compliance monitoring plan, management information and board reporting, financial promotions review, complaints oversight, the Consumer Duty annual board report, training, and, for the MLRO, suspicious activity reports, the annual MLRO report and the firm-wide risk assessment. The FCA will want to see that the person has enough time to do the job, particularly if they hold roles at several firms, so the agreed days should be written into the engagement letter and the Statement of Responsibilities should reflect the arrangement. If SMF16 and SMF17 are combined in one person, the time needs to cover both — our guide on whether you need one, both or a combined role covers that decision.

Retainer or day rate

There are three common structures:

• Monthly retainer. A fixed monthly fee buys an agreed number of days plus reasonable ad hoc contact. It gives the firm a predictable cost and gives the SMF holder a reason to stay engaged between scheduled days. Retainers should say what happens to unused days and how extra days are charged.
• Day rate. The firm pays for days actually worked, usually against a minimum commitment. This suits firms with uneven workloads, such as those in an authorisation application or a remediation project.
• Hybrid. A retainer for the core days with a day rate for project work, regulator meetings or incident response above the baseline. This is the most common structure where the SMF holder is also helping with an FCA application or a skilled person review.

Whichever structure is used, the contract should state what is included: board and committee attendance, regulator meetings, out-of-hours availability for urgent SARs or incidents, and access to a deputy. We do not publish fractional SMF16 or SMF17 rates here because we have not found a published, checkable survey of them; we give current rates on a specific brief.

Comparing a day rate with a salary

A day rate and a salary are not directly comparable. To compare like with like, work out the full annual cost of an employee — salary, bonus, pension, benefits and employer National Insurance, which is 15% on earnings above £5,000 a year from April 2025 — then divide by the days actually worked after holidays and bank holidays. A fractional holder covers their own pension, insurance, training, downtime and gaps between engagements, so their day rate should be set against the fully loaded daily cost of an employee, not salary divided by 365. For a firm that needs two or three days a month, a fractional arrangement is usually far cheaper overall than a part-utilised full-time hire, even where the day rate looks high.

Cover arrangements

A fractional SMF holder is one person, so the engagement needs a plan for when they are away. The usual answers are a named deputy (a deputy MLRO is good practice in any case), a reciprocal arrangement with a colleague who can act for short absences, and clarity about who reports a SAR if the MLRO cannot be reached. Where an SMF holder leaves or is absent for longer, the temporary cover rules allow someone to act without approval for a limited period; following PS26/6, firms have 12 weeks to submit an application, and CP26/37 proposes extending that to 18 weeks. Our guide to interim SMF16 and SMF17 cover sets out how that works in practice. Notice periods in the engagement should be long enough to find and approve a replacement.

When a fractional arrangement is no longer enough — usually because the firm has grown, added permissions or come under closer supervision — the role converts to a part-time employee or a permanent hire. Our Head of Compliance recruitment team handles both the fractional and the permanent stage, so the transition does not leave a gap in approval.

Salary Reviews and Package Structure for SMF Holders

Annual salary reviews for SMF holders at regulated firms must navigate two constraints that do not apply to unregulated executive roles. The first is the firm’s remuneration policy, which at regulated firms is subject to FCA and, where relevant, PRA review and must comply with applicable remuneration code requirements. Variable remuneration for Material Risk Takers — a category that often includes SMF holders — is subject to deferral, vesting and clawback provisions that constrain how variable pay can be structured.

The second constraint is the regulatory reference implication of a departure. Unlike unregulated executives, an SMF holder who leaves following a commercial dispute or a regulatory issue may have those circumstances documented in their regulatory reference — a disclosure that follows them to subsequent regulated employer relationships. This creates a specific dynamic in retention conversations: SMF holders who are considering leaving are sometimes willing to accept a below-market package to avoid a departure that could generate a difficult regulatory reference, and businesses are sometimes willing to pay an above-market package to retain an SMF holder whose departure could trigger a regulatory notification obligation.

Remuneration Rules, Deferral and Material Risk Takers

The rules on how SMF holders can be paid have changed more in the last three years than in the decade before. Anyone setting or negotiating an SMF package should check which code applies to the firm and where each reform stands.

The bonus cap has gone

The cap on the ratio of variable to fixed pay for material risk takers at banks and building societies was removed by the FCA and PRA with effect from 31 October 2023 (FCA PS23/15). Dual-regulated firms now set their own ratio in their remuneration policy. The practical effect for SMF hires is that packages no longer need the inflated fixed pay and “role-based allowances” that the cap encouraged.

Banks and dual-regulated firms: PS25/15 and PS21/25

The joint reforms in FCA PS25/15 and PRA PS21/25 came into force on 16 October 2025 and apply to performance years starting after that date, with some changes available on an optional basis to the performance year then in progress and to unvested awards. The main changes for SMF holders are:

• A single four-year minimum deferral period for all material risk takers, including senior managers, replacing the longer periods that previously applied to SMFs.
• Deferred awards for senior managers can vest pro rata from the point of award, rather than waiting until year three.
• 40% of variable pay deferred, rising to 60% on variable pay above £660,000 (previously £500,000), applied on a marginal basis.
• More flexibility on the cash and instrument mix, and no retention period on deferred instruments.
• A single quantitative test for identifying material risk takers based on the top 0.3% of earners, and proportionality relief for individuals with total pay up to £660,000 where variable pay is no more than a third of the total.

For a bank or building society hiring an SMF, these changes make the package more competitive with non-bank employers and make buy-outs of deferred awards at a previous employer easier to structure.

Investment firms, asset managers and CP26/27

Solo-regulated investment firms currently apply the MIFIDPRU Remuneration Code (SYSC 19G), which applies basic, standard or extended requirements depending on the firm’s size, with deferral and payment in instruments applying only at the extended level. Alternative investment fund managers and UCITS management companies have their own codes. In July 2026 the FCA published CP26/27, proposing to replace the MIFIDPRU, AIFM and UCITS codes with a single consolidated code built on outcomes rather than prescription. Under the FCA’s preferred option, the management body would decide whether deferral applies and how it is structured, rather than following fixed periods and percentages; malus and clawback would become tools firms must consider rather than mandatory features; small and non-interconnected MIFIDPRU firms would fall outside the remuneration requirements; and the MRT definition would be refocused on staff who materially affect client outcomes, investor interests and the firm’s regulatory compliance. That last limb is likely to keep SMF16 and SMF17 holders in scope. The consultation closed on 16 September 2026 and the FCA expects to publish final rules in the first quarter of 2027.

What this means for an SMF offer

• Confirm which code applies before discussing variable pay — a group can be subject to more than one.
• Check whether the role is a material risk taker. Most SMF holders at in-scope firms will be.
• Price any buy-out of deferred awards forfeited at the candidate’s current employer early, because it often decides whether the move happens.
• Record the remuneration committee’s approval of the package, particularly for control function roles where independence needs to be shown.

How the SMCR Reforms Affect SMF Pay

The first phase of SMCR reform, in FCA PS26/6, took effect on 24 April 2026 and changed the temporary cover rules, enhanced firm thresholds and some functions, including SMF18. The second phase is now out for consultation: the FCA’s CP26/37 and the PRA’s CP14/26, both published on 22 October 2026 and closing on 22 January 2027.

• Notification instead of approval for some roles. The FCA proposes that SMF5 and SMF10 to SMF15 at enhanced and dual-regulated firms become notified roles. The PRA’s list includes SMF5, SMF6, SMF10, SMF11, SMF12, SMF14, SMF20 and SMF20a. Notified holders would keep the same accountability.
• Removal of SMF18 and SMF22, with their prescribed responsibilities reallocated to other senior managers.
• SMF16 and SMF17 stay pre-approved. The approval step and the personal exposure for compliance oversight and money laundering reporting do not change, so the factors that drive pay for those roles stay in place.
• The Certification Regime would be removed, along with regulatory references for certified staff, and enhanced firm thresholds would rise, so fewer firms would need the full enhanced set of SMFs.
• Temporary cover would extend from 12 to 18 weeks, which gives firms a little more time to fill an unexpected vacancy.

Our view is that these proposals are more likely to change the speed of NED and committee chair appointments than their fees, because the accountability is unchanged. The bigger pay effect may come at firms that drop out of the enhanced category and stop needing certain SMFs altogether.

Setting an SMF Package: A Practical Approach

Pay problems in SMF hiring are usually set at the brief stage, not the offer stage. A short process avoids most of them:

• Define the function precisely. Which SMF, which prescribed responsibilities, which remuneration code, and whether the role is full-time, part-time or fractional.
• Pick the right comparators. Use the recruiter ranges for the right region and experience band, and ASHE only as a floor check. Compare with firms of similar size and permissions, not with the largest names in the sector.
• Separate fixed and variable pay. For control functions, keep variable pay tied to the firm and to the individual’s own objectives, not to the revenue of the areas they oversee.
• Cost the regulatory extras. D&O cover, any buy-out of deferred awards, notice periods long enough to cover a Form A on replacement, and the time to approval.
• Agree the package with the remuneration committee before approaching candidates, so there is no gap between the brief and what the market will accept.

Our compliance and risk recruitment team gives market pay advice at the brief stage of each search, and our C-suite salary guide covers pay for non-regulated executive roles.

SMF Compensation and Package Structure: Quick Reference

The table below summarises where each figure in this guide comes from, what it covers and its main limitation. Use it to choose the right comparator for the role you are hiring.

For a specific market rate discussion on any SMF function, call 0203 834 9616 or use the contact details below. All figures in this guide are taken from the sources linked and should be treated as indicative rather than definitive — individual packages will be influenced by firm type, scale, candidate seniority and the specific regulatory context of the appointment.

Frequently Asked Questions on SMF Compensation

Do SMF holders receive a premium over equivalent non-SMF executives at the same firm?

In most cases, yes — though the premium is not always explicit in the job title or role description, and no public source measures its size. It reflects the personal regulatory accountability, the Form A approval process, the ongoing compliance obligations and the career-long regulatory reference implications of holding an SMF. At firms where the SMF designation is well understood by the board and remuneration committee, the premium is built into the compensation framework explicitly. At firms where the regulatory significance of SMF is less well understood, the market will enforce it through candidate expectations even if the firm does not recognise it in its compensation framework design.

How does the FCA’s remuneration code affect SMF pay at regulated firms?

The remuneration codes — SYSC 19D for banks and other dual-regulated firms, SYSC 19G (MIFIDPRU) for investment firms, and separate codes for AIFMs and UCITS management companies — impose requirements on how variable remuneration can be structured for Material Risk Takers, a category that frequently includes SMF holders. At dual-regulated firms, PS25/15 and PS21/25 set a four-year minimum deferral for all MRTs, with 40% of variable pay deferred, rising to 60% above £660,000. Malus and clawback apply, and guaranteed variable pay is restricted. Firms usually take specialist advice before designing variable compensation for an SMF holder, and the remuneration committee (SMF12 where designated) must be satisfied that the structure complies.

How should firms handle SMF compensation disclosure obligations?

Listed regulated firms are subject to the standard listed company remuneration disclosure requirements, including the directors’ remuneration report required by company law and the reporting expectations of the UK Corporate Governance Code. For unlisted regulated firms, the FCA does not require individual SMF compensation disclosure, but banks publish aggregate material risk taker pay in their Pillar 3 disclosures, MIFIDPRU investment firms publish remuneration disclosures, and firms must be able to show the regulator on request that their remuneration structures comply with the applicable code. Dual-regulated firms also provide remuneration data annually on high earners and benchmarking.

What is the typical gap between an initial SMF offer and the candidate’s expectations?

In our experience the gap between a firm’s initial compensation expectation and what a strong candidate will accept is frequently larger than hiring managers expect, across SMF designations and firm types. The most common cause is that the firm’s initial expectation was set with reference to the role’s internal grade or historical comparators rather than the current external market. Exec Capital provides market compensation advice at the brief stage of each search to align expectations before candidate approaches begin — leaving this gap to the point of offer rather than the point of brief is one of the most common causes of failed placements.

Can a regulated firm offer performance-related compensation to an SMF holder for their regulatory performance?

The FCA has historically been sceptical of remuneration structures that appear to reward or penalise SMF holders for regulatory compliance outcomes — on the grounds that regulatory compliance should be an unconditional expectation of holding an SMF, not a variable incentive. In practice, some firms do include regulatory conduct metrics in their performance frameworks for SMF holders, and the FCA has not prohibited this categorically, but any such structure should be designed with legal advice and documented in the remuneration committee’s minutes as having been specifically considered and approved.

How does interim SMF compensation compare to permanent SMF compensation?

Interim SMF appointments are paid a day rate that is higher than the daily equivalent of a permanent salary, reflecting the flexibility, the absence of benefits (pension, private healthcare, life assurance), the self-employment and business cost overhead, and the typically shorter duration of the engagement. Firms that assess interim SMF costs solely on the day rate without taking into account the absence of employer on-costs and benefits, and the flexibility of ending the engagement at relatively short notice, often overestimate the cost difference relative to a permanent appointment.

What is the average chief compliance officer salary in the UK?

There is no official average. The ONS codes chief compliance officers to SOC 2482, where the full-time median is £52,073, but that occupation is dominated by quality assurance and regulatory roles in other industries. For regulated financial services, Hays’ 2026 guide puts a London Head of Compliance/Risk at £130,000–£200,000 (typical £160,000) and Morgan McKinley’s puts a London Head of Compliance with five or more years’ experience at £150,000–£300,000. Both are base salaries.

How much does a fractional SMF16 or MLRO cost?

It depends on the number of days and the structure: a monthly retainer for a set number of days, a day rate against a minimum commitment, or a mix of the two. The main drivers are the firm’s permissions, its transaction and SAR volumes, whether SMF16 and SMF17 are combined, and whether the firm is mid-way through an authorisation or remediation. We have not found a published, checkable survey of fractional SMF rates, so we give current rates on a specific brief rather than quoting a range here.

Does the ONS publish salaries for SMF roles?

No. ASHE reports pay by occupation code, not by regulatory designation. The nearest codes are 1111 (chief executives and senior officials), 1131 (financial managers and directors), 2440 (which includes chief risk officers) and 2482 (which includes heads of compliance and chief compliance officers). They are useful as a floor, not as a guide to SMF pay.

Is the bonus cap still in force?

No. The FCA and PRA removed the cap on the ratio of variable to fixed pay with effect from 31 October 2023. Deferral, malus and clawback still apply to material risk takers, and for dual-regulated firms the minimum deferral period is now four years under PS25/15 and PS21/25.

Do payment and e-money institutions need SMF holders?

No. Payment and e-money institutions are authorised under the Payment Services Regulations and the Electronic Money Regulations and are outside SMCR. They still need a money laundering reporting officer and someone responsible for compliance with the money laundering regulations, and pay for those roles follows the SMF16 and SMF17 market. Firms that also hold FSMA permissions, or that become authorised under the new cryptoasset regime, do come within SMCR.

Will the SMCR Phase 2 reforms change SMF pay?

Not directly. CP26/37 and CP14/26 propose notification rather than pre-approval for roles including SMF5 and several committee chair functions, but the accountability stays the same. SMF16 and SMF17 remain pre-approved. The consultations close on 22 January 2027, with the FCA expecting final rules in the first half of 2027 and the PRA indicating implementation in the second half of 2027.