SMF Salary Guide: Senior Management Function Pay Benchmarks 2026

SMF Salary Guide: Senior Management Function Pay Benchmarks 2026

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 benchmark for an SMF holder from a general executive salary guide.

This guide covers current salary benchmarks 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.

These benchmarks are drawn from Exec Capital’s direct placement experience at FCA-regulated firms and from market intelligence gathered through active searches in 2025 and 2026. They reflect the UK regulated financial services market across all firm types — banks, insurers, asset managers, wealth managers, payment institutions and other FCA-authorised businesses. Every SMF search at Exec Capital is led personally by Adrian Lawrence FCA, an ICAEW Fellow with verified practising certificate and direct FCA-regulated environment experience. Call 0203 834 9616 to discuss a specific SMF appointment or salary question.

What Makes SMF Compensation Different

Before examining role-by-role benchmarks, 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 FCA 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 regulatory approval process for SMF holders typically takes eight to sixteen weeks and involves FCA assessment of the individual’s fitness and propriety, regulatory references from previous employers and, in some cases, a regulatory interview. The disruption to an individual’s career timeline caused by this process, and the ongoing obligation to maintain their regulatory standing, is increasingly 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 document 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.

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 benchmarks 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.

At smaller FCA-regulated firms (AUM or revenue below £50m), SMF1 CEO base salaries range from £150,000–£250,000, reflecting the smaller commercial scale of the business. At mid-size regulated firms (£50m–£300m revenue or equivalent), base salaries of £250,000–£450,000, with total packages including bonus of £350,000–£700,000. At larger regulated firms — major wealth managers, mid-size banks, significant insurance groups — SMF1 CEO total compensation of £500,000–£1,500,000 is typical, though at the very largest regulated institutions (FTSE 100 banks, major insurers) compensation substantially exceeds these ranges.

The premium for a first-time SMF1 appointment — where an individual is making the transition from a non-SMF executive role to a CEO designation at a regulated firm — is typically 20–30% above the individual’s current compensation, reflecting both the salary increase expected at the seniority level and the regulatory accountability premium that SMF1 carries.

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 FCA’s capital adequacy notification requirements.

At smaller regulated firms, SMF2 CFO base salaries of £120,000–£200,000 are typical. At mid-size regulated firms, £180,000–£320,000 base with total packages of £250,000–£480,000. At larger institutions and those with complex capital structures, base salaries of £280,000–£500,000 with variable elements that can significantly increase total compensation. At the group CFO level of a major UK bank or insurer, total SMF2 compensation of £800,000–£2,000,000 is not uncommon, though this reflects scale rather than being broadly representative of the regulated firm CFO market.

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 (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, Executive Directors with SMF3 designation typically receive base salaries of £200,000–£500,000 with total packages that reflect their seniority and the commercial significance of the business unit they lead. At smaller regulated firms where the SMF3 is a senior functional head with board responsibility rather than a divisional CEO equivalent, base salaries of £150,000–£280,000 are more typical.

SMF4 — Chief Risk Function

The Chief Risk Function (SMF4) is the Chief Risk Officer designation at FCA-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.

Base salaries for SMF4 CROs range from £150,000–£250,000 at smaller regulated firms to £250,000–£450,000 at mid-size firms. At larger institutions and those with complex risk profiles (dual-regulated banks, life insurers, large asset managers), SMF4 total compensation of £400,000–£900,000 reflects the seniority and significance of the function. Interim SMF4 appointments command day rates of £1,200–£3,000 depending on firm complexity and urgency.

SMF5 — Head of Internal Audit Function

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

SMF5 compensation at smaller regulated firms ranges from £100,000–£180,000. At mid-size firms with established internal audit functions, £160,000–£270,000 base. At larger institutions where the internal audit function covers multiple business lines, products and jurisdictions, SMF5 base salaries of £250,000–£400,000 and total packages of £350,000–£600,000 are typical. The SMF5 premium over an equivalent unregulated Head of Internal Audit role is typically 15–25%, reflecting the FCA designation and independence accountability.

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 typically fee-based rather than salary-based, reflecting the non-executive nature of the appointment.

SMF9 Chair fees at smaller FCA-regulated firms range from £50,000–£100,000 per annum. At mid-size regulated firms, £80,000–£180,000. At larger institutions — major wealth managers, mid-size banks, significant insurers — Chair fees of £150,000–£350,000 per annum are typical. At the very largest UK regulated institutions, Chair fees substantially exceed these ranges.

Many Chairs hold portfolios of four to six NED and chair roles simultaneously, and the total income from a Chair’s 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 has supported fee growth above general NED market benchmarks over the past three years.

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.

Risk Committee Chair (SMF10) fees typically range from £40,000–£100,000 per annum at mid-size regulated firms, reflecting the time commitment of leading a committee that meets four to eight times per year plus additional engagement with the CRO function, the PRA and the FCA. At larger institutions with complex risk profiles, SMF10 fees of £100,000–£200,000 per annum reflect the significance of the risk governance accountability.

Audit Committee Chair (SMF11) fees follow a similar pattern — £40,000–£90,000 at smaller firms, rising to £90,000–£180,000 at institutions with complex financial reporting, significant external audit relationships or regulatory capital complexity. The SMF11’s accountability for the quality of financial reporting and the independence of internal audit makes this one of the more demanding committee chair roles in governance terms.

Remuneration Committee Chair (SMF12) fees of £30,000–£80,000 per annum at mid-size regulated firms reflect the typically lighter meeting cadence of the RemCo relative to the Audit and Risk committees, though at firms subject to complex remuneration code provisions (MIFIDPRU, PRA remuneration rules, Solvency II) the SMF12 accountability is substantially more demanding and fees reflect this.

Nominations Committee Chair (SMF13) fees at mid-size regulated firms range from £30,000–£70,000 per annum in the absence of active board succession activity, rising materially during CEO or Chair succession processes where the NomCo Chair’s time commitment can be equivalent to a significant part-time executive role.

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 SID premium over the base NED fee at FCA-regulated firms is typically £10,000–£40,000 per annum, depending 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 underway — 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.

SMF16 base salaries at smaller FCA-regulated firms range from £90,000–£160,000. At mid-size firms with established compliance functions, £150,000–£260,000 base with total packages of £190,000–£380,000. At larger regulated firms with complex compliance environments — Consumer Duty, CASS, financial crime, operational resilience — SMF16 base salaries of £220,000–£380,000 and total packages of £300,000–£550,000 are not uncommon. The premium for SMF16 candidates with specific regulatory expertise (dual-regulated experience, Consumer Duty implementation track record, FCA enforcement response experience) can be 20–35% above the standard benchmark.

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 risk of individual prosecution under the Proceeds of Crime Act 2002 — for failures in the firm’s anti-money laundering controls that go beyond the civil regulatory sanctions that apply to other SMF holders. This unique liability profile increasingly influences MLRO compensation expectations.

MLRO base salaries at smaller regulated firms range from £80,000–£150,000. At mid-size firms, £130,000–£230,000 with total packages of £160,000–£330,000. At larger regulated firms with significant AML compliance complexity — banks, payment institutions, wealth managers with complex beneficial ownership structures — MLRO base salaries of £180,000–£320,000 and total packages of £250,000–£450,000. Fractional MLRO arrangements at smaller firms are typically priced at £40,000–£90,000 per annum for part-time engagement.

SMF24 — Chief Operations Function

The Chief Operations Function (SMF24) is the COO designation at FCA-regulated firms. The SMF24 was introduced relatively recently in the SMCR framework and reflects the FCA’s growing focus on operational resilience as a board-level governance matter. SMF24 holders carry personal accountability for the firm’s operational resilience — its ability to deliver critical business services through disruption — and for compliance with the FCA’s operational resilience framework (PS21/3) and, for firms in scope, the DORA requirements that came into force in January 2025.

SMF24 COO base salaries at smaller regulated firms range from £130,000–£220,000. At mid-size regulated firms, £180,000–£320,000 base with total packages of £250,000–£480,000. At larger regulated firms and those with significant operational complexity — payment institutions, banks with complex technology infrastructure, large insurance groups — SMF24 base salaries of £250,000–£420,000 and total packages of £350,000–£650,000 reflect the operational scale and regulatory significance of the role.

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 premiums outlined above. For NEDs who do not hold a committee chair designation, base NED fees at smaller regulated firms range from £25,000–£60,000 per annum. At mid-size firms, £40,000–£90,000 per annum. At larger institutions, £80,000–£180,000 per annum as a base NED fee, before any committee chair premium.

The FCA’s expectation that NEDs spend adequate time on their regulated firm responsibilities — typically 20–30 days per year for a base NED role and substantially more for committee chairs — means that experienced NEDs are selective about which boards they join. This selectivity is supported by the market for NED roles at regulated firms, where 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.

Salary Reviews and Benchmarking 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 will have those circumstances documented in their regulatory reference — a disclosure that follows them to all 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.

SMF Salary Benchmarks: Quick Reference

The table below summarises the mid-point of the base salary ranges covered in this guide for easy reference. These are mid-market benchmarks for established regulated firms of moderate complexity — smaller firms will typically be at the lower end of each range, larger and more complex institutions at the upper end or above.

SMF1 CEO: £150,000–£450,000 base. SMF2 CFO: £120,000–£320,000. SMF3 Executive Director: £150,000–£500,000 (highly context-dependent). SMF4 CRO: £150,000–£450,000. SMF5 Head of Internal Audit: £100,000–£400,000. SMF9 Chair: £50,000–£350,000 (fee-based). SMF10 Risk Committee Chair: £40,000–£200,000 (incremental to NED fee). SMF11 Audit Committee Chair: £40,000–£180,000. SMF12 Remuneration Committee Chair: £30,000–£80,000. SMF13 Nominations Committee Chair: £30,000–£70,000. SMF14 Senior Independent Director: £10,000–£40,000 incremental to NED fee. SMF16 Head of Compliance: £90,000–£380,000. SMF17 MLRO: £80,000–£320,000. SMF24 COO: £130,000–£420,000.

For a specific market rate discussion on any SMF function, call 0203 834 9616 or use the contact details below. All ranges are 2026 benchmarks based on Exec Capital’s direct search experience and should be treated as indicative rather than definitive — individual packages will be influenced by firm type, AUM 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. The regulatory accountability premium for SMF designation is typically 15–30% above the compensation of an equivalent-seniority executive who does not hold an SMF designation. This premium 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, this premium is built into the compensation framework explicitly. At firms where the regulatory significance of SMF is less well understood, the market will enforce the premium 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 FCA’s remuneration code provisions — which apply in different forms to different firm types under MIFIDPRU (investment firms), SYSC 19A (banks and PRA-regulated entities) and other applicable rules — impose specific requirements on how variable remuneration can be structured for Material Risk Takers, a category that frequently includes SMF holders. Key requirements include deferral of a proportion of variable remuneration (typically 40–60% deferred over three to five years), malus and clawback provisions, and restrictions on the use of instruments that effectively guarantee variable remuneration. Firms must obtain a legal opinion on the applicable remuneration code provisions before designing any variable compensation structure for an SMF holder, and the remuneration committee (SMF12) must be satisfied that the structure complies with the applicable requirements.

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 under the UK Corporate Governance Code. For unlisted regulated firms, the FCA does not require individual SMF compensation disclosure, but firms must be able to demonstrate to the FCA on request that their remuneration structures comply with the applicable remuneration code provisions. The PRA additionally requires certain information about Material Risk Taker remuneration from dual-regulated firms as part of its supervisory data collection.

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

In retained search placements at regulated firms, the gap between the firm’s initial compensation expectation and the market-clearing compensation for the strong candidate is typically 15–30%. This gap is larger than most hiring managers expect and is consistent across SMF designations and firm types. The most common cause is that the firm’s initial compensation 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 every search to align expectations before candidate approaches begin — managing this gap at 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 should be 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 command a significant day-rate premium over the equivalent annualised permanent compensation, reflecting the flexibility premium, the absence of benefits (pension, private healthcare, life assurance), the self-employment and business cost overhead, and the typically shorter duration of the engagement. Day rates for interim SMF holders are typically equivalent to 1.5–2.0x the daily rate implied by the equivalent permanent base salary. 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 differential relative to a permanent appointment.