SMF16 Head of Compliance: The Hiring Guide for FCA-Regulated Firms

SMF16 Head of Compliance: The Hiring Guide for FCA-Regulated Firms

Appointing a Head of Compliance for an FCA-regulated firm is categorically different from appointing a compliance professional in an unregulated business. The individual holding the SMF16 Compliance Oversight function under the Senior Managers and Certification Regime carries personal regulatory accountability to the FCA — not institutional accountability, personal accountability. If the firm’s compliance framework is inadequate, the SMF16 holder faces direct regulatory consequences: financial penalties, public censure, and prohibition from working in regulated financial services. Understanding that accountability structure is the starting point for everything else about how you hire, assess, and onboard the individual.

This guide is written for chairs, CEOs, and boards of FCA-regulated firms who are either making their first SMF16 appointment, replacing an existing Head of Compliance, or upgrading the function as the firm’s regulatory profile grows. It covers what the SMF16 function actually requires, what distinguishes a strong candidate from a credentialled but insufficient one, how the FCA’s fitness and propriety assessment works, what the appointment timeline looks like, and the most common mistakes firms make in this hire. For Exec Capital’s SMF16 recruitment service, see our Head of Compliance Recruitment page.

What the SMF16 function actually requires

SMF16 is the Compliance Oversight Senior Management Function under the FCA’s Senior Managers and Certification Regime. The individual approved to hold this function is responsible for overseeing the firm’s compliance with applicable regulatory requirements — not for delivering compliance activity itself, but for ensuring the compliance framework is adequate, properly resourced, and operating effectively across the business.

The distinction matters. An SMF16 holder who is personally executing compliance activity — reviewing individual client files, writing compliance monitoring reports, building KYC workflows — is operating below the function. Their role is to ensure that someone competent is doing those things, that the systems and processes supporting them are fit for purpose, and that the board has accurate information about the firm’s regulatory risk profile and compliance performance. The SMF16 holder is the senior manager responsible for the compliance framework, not the compliance practitioner delivering within it. In smaller firms these roles often sit in one person, but they should not be confused.

The function is defined in the FCA Handbook by reference to responsibility for the firm’s compliance function, and the FCA’s policy statement extending SMCR to all FCA firms explains how it applies to solo-regulated firms. In practice that covers the firm’s compliance policies, the compliance monitoring programme, and the escalation of material compliance concerns to the board, and the firm may also allocate prescribed responsibilities to the holder. Exactly what the individual is accountable for is set out in their statement of responsibilities. Under the duty of responsibility, the FCA can take action against the SMF16 holder if they did not take reasonable steps to prevent a breach in their area — including where the function was inadequately resourced by the business. An SMF16 who raises resource concerns with the board and is overruled has some protection; an SMF16 who does not raise them has very little.

Which firms need an SMF16?

For solo-regulated firms, Compliance Oversight is one of the required functions for Core and Enhanced firms, so most FCA-authorised investment firms, insurance intermediaries, consumer credit firms with full permission, wealth managers and asset managers need one. Limited Scope firms have reduced requirements and usually rely on the SMF29 Limited Scope Function instead, with SMF16 applying only where other rules require it. Banks, building societies and insurers regulated by both the PRA and FCA also need an FCA-approved SMF16. Payment institutions and e-money institutions authorised only under the Payment Services Regulations or Electronic Money Regulations sit outside SMCR, so they do not appoint an SMF16 as such, although they still need competent compliance leadership and an MLRO. If you are unsure which category your firm falls into, check your SMCR categorisation and permissions before you write the brief: it changes who you are hiring for.

When firms need to appoint or replace their SMF16

The most common circumstances requiring a new SMF16 appointment are departure of the existing holder, FCA authorisation for the first time, a significant change in regulatory risk profile following business growth or new product launch, and regulatory supervisory pressure suggesting the current function is inadequate.

Departure of the existing holder creates an immediate regulatory obligation: the firm must notify the FCA and put cover in place. Under the 12-week rule, another person can perform the function without approval to cover a temporary or reasonably unforeseen absence. Since the FCA’s PS26/6 reforms took effect on 24 April 2026, the 12 weeks is a deadline for submitting the application for the replacement, rather than for receiving approval. Operating without an approved or properly covered SMF16 is itself a regulatory breach. An interim Head of Compliance can hold the function while the permanent search runs, and for urgent SMF16 coverage — particularly where the firm faces an FCA deadline — a specialist search firm can usually move quickly because experienced interim compliance leaders are used to short-notice starts.

First-time FCA authorisation requires the proposed SMF16 to be assessed by the FCA as part of the authorisation process. A proposed SMF16 who cannot satisfy the FCA’s fitness and propriety assessment will delay or prevent authorisation. Getting the SMF16 appointment right before the authorisation application is submitted is therefore not a detail — it is a prerequisite for the application proceeding smoothly.

Regulatory supervisory pressure — a Section 166 skilled person review, a Dear CEO letter, direct supervisory engagement about compliance weaknesses — is often the catalyst for an urgent SMF16 upgrade. In this context, appointing a more experienced Head of Compliance is one of the most effective signals a firm can send to the regulator that it is taking the concerns seriously. The quality and credibility of the individual appointed, and the speed at which they are appointed, are both factors the FCA watches. Our guide to interim SMF16 and SMF17 cover during FCA supervision covers that scenario in more detail.

Fractional and part-time SMF16

Most of the SMF16 enquiries we see from smaller firms are not for a full-time Head of Compliance. They are for an experienced, already-approved compliance leader who will hold SMF16 — often SMF16 and SMF17 together — for one or two days a week. That is a perfectly legitimate structure. Nothing in SMCR requires the SMF16 holder to be a full-time employee, and the FCA approves individuals for functions, not for job descriptions or contract types. What the FCA does require is that the person has the time, resources and competence to discharge the function properly. A fractional compliance officer who meets that test is a sound appointment; one who does not is a regulatory risk however well qualified they are.

When one or two days a week works

A fractional SMF16 is usually the right answer when the firm’s regulated activity is narrow and stable, the compliance workload is predictable, and the business cannot justify, or does not need, a full-time senior compliance salary. Typical examples include:

• Small directly authorised IFAs, wealth managers and financial planners with a limited product range.
• General insurance and specialist brokers, including start-up brokers in their first years after authorisation.
• Smaller investment firms and corporate finance boutiques with a small number of clients and no client money.
• Consumer credit firms with full permission but modest volumes and a simple customer journey.
• Newly authorised firms that need an approved SMF16 in place from day one but will not have a full-time compliance workload until they scale.

It works less well where the firm runs high volumes of retail business, holds client money or assets, oversees a large appointed representative network, is launching new products frequently, or is under active supervisory scrutiny. In those situations the workload is less predictable and the board needs someone available most days. The question is not whether the person is part-time; it is whether the time they give matches the risk the firm runs. Our guide to choosing between permanent, interim and fractional compliance hires works through that judgement in more depth.

What the FCA expects on time commitment

The FCA does not set a minimum number of days for any senior manager function. Its guidance on preparing a senior manager application says firms should check the candidate has the appropriate time to discharge their responsibilities, should disclose all directorships and partnerships held in the past ten years, should check the candidate is not overcommitted or conflicted, and should be open about any concerns over time capacity. For a fractional candidate that means the FCA will look at the whole picture: how many other firms they act for, whether they hold SMFs elsewhere, how many days those roles take, and whether what remains is realistic for your firm.

Accountability does not scale down with the days. A fractional SMF16 carries exactly the same personal responsibility as a full-time one, which is why good fractional candidates are selective about the firms they take on and insist on clear terms before they agree to be named on a Form A.

Combined SMF16 and SMF17

In small firms the most common fractional brief is a combined SMF16/17: one person holding Compliance Oversight and the Money Laundering Reporting Officer function. The FCA permits this, and in a low-complexity firm it is often the most proportionate structure. The combined holder needs genuine depth in both areas — conduct regulation for SMF16, and the Money Laundering Regulations, suspicious activity reporting and financial crime controls for SMF17 — and the time allocation has to cover both. A day a week that is consumed by AML alerts leaves nothing for compliance monitoring. Our article on the dual SMF holder at smaller regulated firms sets out where the combined model works and where it starts to strain, and if the firm needs a separate financial crime lead we also place fractional MLROs.

How to evidence adequate resource

If you appoint a fractional SMF16, assume the FCA will ask how the arrangement works in practice and build the evidence before you submit. The firms whose applications go most smoothly can show:

• A written engagement that sets out the days committed, the scope of the role and the SMF responsibilities, rather than a loose consultancy agreement.
• Availability outside the agreed days — how quickly the SMF16 will respond to an urgent matter such as a complaint escalation, a financial promotion query or a breach.
• A capacity assessment recording the candidate’s other roles, the days each takes, and why the total is manageable. Keep it on file and reflect it in the application.
• Support underneath the SMF16 — a compliance administrator, outsourced monitoring, or a compliance consultancy — so that the SMF16 oversees work rather than doing all of it. Outsourcing tasks does not outsource responsibility, which stays with the firm and the SMF16.
• A compliance monitoring plan and board reporting cadence that fit the days available, with a named date for the first board report.
• Direct access to the board and the right to escalate, documented in the statement of responsibilities and the firm’s governance arrangements.
• A review trigger — an agreed point (new permissions, headcount, volumes, an acquisition) at which the board will reassess whether the time commitment is still enough.

Fractional SMF16 holders are usually engaged on a day-rate basis, often through their own company. That raises practical points the firm should settle early: whether the off-payroll working rules apply, who provides directors’ and officers’ or professional indemnity cover, and what notice each side must give so the firm is never left without cover. Where the arrangement is working, many firms keep the same fractional SMF16 for years and only move to a full-time hire when the business has genuinely outgrown the model. Our SMF16 recruitment service handles fractional, interim and permanent briefs through the same search process.

SMF16 versus SMF17: different accountability, different profile

SMF16 and SMF17 are the two most commonly combined Senior Management Functions in smaller FCA-regulated firms, and understanding their different accountability structures is essential to hiring for either. SMF16 is the Compliance Oversight function — responsible for the regulatory compliance framework broadly. SMF17 is the Money Laundering Reporting Officer function — responsible specifically for the firm’s AML and CTF framework and for Suspicious Activity Reports to the National Crime Agency.

The accountability structures are different in important ways. SMF16 accountability is primarily regulatory — the FCA can take supervisory action against the SMF16 holder for compliance framework failures. SMF17 accountability extends to criminal law — the MLRO can face criminal prosecution under the Proceeds of Crime Act 2002 for failure to make a SAR where there are reasonable grounds to suspect money laundering. Both functions carry serious personal exposure, but the nature of the exposure is different.

In many smaller FCA-regulated firms, both functions are held by a single individual. This dual-hat arrangement is permitted by the FCA and is common practice. The key question is whether the combined workload and risk profile is manageable for one person. Where the business has a material AML risk profile — high-volume transaction monitoring, complex customer due diligence requirements, significant PEP exposure — a single individual holding both functions is likely to be overextended. Where the business is smaller and lower-risk on the AML dimension, the combined role is often a sensible and proportionate structure. For a fuller comparison, see SMF16 vs SMF17: when you need one, both, or a combined role.

Permanent, interim or fractional SMF16: comparing the options

The three engagement models solve different problems. The table below sets out the practical differences; the right answer depends on the firm’s size, risk profile and what has prompted the hire.

Many firms combine the models: an interim covers the vacancy and stabilises the function, then hands over to a permanent or fractional successor. If the role sits above SMF16 — a Chief Compliance Officer leading several heads of compliance — our compliance director recruitment and interim CCO services cover those briefs.

What to look for in an SMF16 candidate

The assessment framework for an SMF16 appointment needs to address three distinct dimensions: technical regulatory knowledge, judgement under pressure, and board-level communication capability. A candidate who scores well on the first and poorly on the others will create compliance infrastructure that works technically but fails at the moments that matter most.

Technical knowledge for an SMF16 in financial services means command of the FCA’s SYSC sourcebook, familiarity with the relevant conduct rules under SMCR, understanding of the FCA’s supervisory approach and enforcement patterns in the firm’s sector, and working knowledge of the compliance monitoring and reporting frameworks that keep the board informed. The specific technical depth required depends heavily on the firm’s sector: an SMF16 for a retail investment firm needs command of COBS and PROD that a consumer credit firm’s SMF16 does not require, while the consumer credit SMF16 needs depth in CONC, and vice versa. Generic compliance experience is not a substitute for sector-specific technical knowledge at the SMF16 level. Our chief compliance officer job description is a useful starting point for the role specification.

Judgement under pressure is harder to assess but more important. The SMF16 function routinely creates friction between regulatory obligation and commercial pressure — new products that are commercially attractive but regulatorily marginal, client practices that generate revenue but raise conduct questions, cost pressures that the business wants to resolve by reducing compliance resource. The SMF16 who cannot hold their position under commercial pressure, or who resolves the tension by adjusting their assessment of the regulatory position rather than their position in the business conversation, is a regulatory liability regardless of their technical competence.

Board-level communication capability means the ability to convey complex regulatory risk in terms that non-specialist directors can understand, act on, and be held accountable for. An SMF16 who writes board reports in regulatory language that directors cannot parse is failing at one of their most important functions. The best SMF16 holders frame regulatory risk in business terms — what could go wrong, what it would cost, what the probability is, and what the firm needs to do differently to reduce the risk to an acceptable level. For a broader view of the selection process, see how to hire a chief compliance officer.

FCA fitness and propriety for SMF16 candidates

Before an individual can hold the SMF16 function, the FCA must approve them as fit and proper. The FCA’s fitness and propriety assessment, set out in the FIT sourcebook, evaluates three dimensions: honesty, integrity and reputation; competence and capability; and financial soundness.

Honesty, integrity and reputation covers the candidate’s regulatory history — previous FCA or PRA enforcement action, regulatory references from former employers, any criminal history, and any matters that might suggest the individual is not of the character required for a senior management function. A candidate with a previous regulatory sanction is not automatically disqualified, but they will face a more demanding assessment and will need to demonstrate clearly what changed and how.

Competence and capability for SMF16 is assessed against the specific requirements of the function as it will operate in the applicant firm — not against a generic competence standard. The FCA wants to understand whether the proposed SMF16 has the knowledge, skills, and experience to oversee compliance effectively in the firm’s specific regulatory context, at the firm’s current stage of development and risk profile. A candidate who has been a strong Head of Compliance at a comparable firm in the same sector, with a track record to prove it, will typically satisfy this dimension comfortably. A candidate from a different regulatory environment who is being proposed for a more complex SMF16 role will face closer scrutiny.

Financial soundness covers the candidate’s personal financial position. The FCA is alert to candidates with significant personal debt problems, insolvency history, or financial pressures that might create vulnerability to corruption or undue influence. This is assessed through the Form A application process and through the regulatory reference the candidate provides from their most recent regulated employer.

Form A tips for an SMF16 application

The Form A is where a good appointment can still stall. The FCA’s own guidance on applying for a senior management function lists incomplete checks and references among the common causes of delay, and its assessment only starts once it has a complete application. These are the points that matter most for SMF16:

• Use the right version. A longer Form A applies where the candidate has no previous senior manager or controlled function history, has not been approved for six months or more, or has had a change in fitness and propriety since their last approval. Many fractional candidates already hold approvals elsewhere, which usually simplifies this.
• Run the criminal record check early. Since 24 April 2026 a check for an SMF candidate stays valid for six months rather than three, and is no longer needed for internal or intragroup moves. If the check is older than six months, the application has to explain how the firm is still satisfied the candidate is fit and proper.
• Request regulatory references at offer stage. Firms are now expected to aim to provide references within four weeks rather than six, but you should still chase every previous regulated employer from the past six years as soon as the candidate accepts.
• Disclose every directorship. The FCA expects all directorships and partnerships from the past ten years, active or not. Fractional candidates often have several; list them all and explain the time each takes.
• Write a self-contained statement of responsibilities. It should describe exactly what the SMF16 is accountable for in your firm, be consistent with your responsibilities map where you need one, and make sense without cross-references to internal documents.
• Show how you assessed competence. Keep notes of your interviews and explain any gaps in experience and how they will be closed — training, support, or a deputy with the missing expertise.
• If in doubt, disclose. The FCA’s position is that anything which might affect fitness and propriety should be disclosed, with evidence. Late discoveries cause more delay than early disclosure.
• Respond quickly to questions. The FCA can pause the clock while it waits for information, and may reject an application where a firm does not respond in time. It may also invite the candidate to interview, and will tell you in advance what it wants to explore.

Our guide FCA Form A: what boards need to know covers the board’s role in the application in more depth.

Compensation and Package Structure

Pay for an SMF16 varies widely with the size and complexity of the firm, the sector, whether the role is combined with SMF17, and whether it is permanent, interim or fractional. Rather than quote ranges that date quickly, it is more useful to agree the structure of the package before you go to market and test the level against live candidates during the search. Our SMF salary guide covers pay across the senior manager functions.

For a permanent SMF16, the package normally has four parts: base salary, an annual bonus, pension and benefits, and protections that reflect the personal regulatory exposure of the role. Bonus design needs care. The remuneration codes that apply to many firms require control-function staff to be rewarded against the objectives of their own function and independently of the performance of the business areas they oversee, and even where a code does not apply, a Head of Compliance whose bonus depends on sales sends the wrong signal to the regulator and to the team. Directors’ and officers’ insurance that clearly covers regulatory investigations, a sensible notice period, and agreed access to independent legal advice if the FCA opens an investigation are all things experienced candidates will ask about.

Interim and fractional SMF16s are usually paid a day rate. For interims the rate is paid for each day of a full-time assignment; for fractional holders it is paid only for the days worked, which is why fractional is often the cost-effective route for smaller firms. Agree upfront how time beyond the contracted days will be handled, because an SMF16 who is worried about unpaid overruns may hesitate to pick up the phone when the firm needs them.

Interview questions that reveal genuine SMF16 capability

Standard compliance interview questions — “describe your experience of regulatory change management”, “how do you build relationships with the regulator” — produce rehearsed answers that do not distinguish candidates. The questions that reveal genuine SMF16 capability are specific, situational, and designed to surface judgement rather than knowledge.

Ask the candidate to describe a specific situation where they disagreed with the business on a compliance matter and explain what happened. Press for the detail: what was the disagreement, who was applying pressure, what was at stake, what did they do. A candidate who has held an SMF16-equivalent function will have at least three or four clear examples. A candidate who struggles to describe a single genuine disagreement has either not been operating at the right level or is not being candid.

Ask what the firm’s most significant compliance failure has been during their tenure and what they did about it. The answer reveals whether the candidate owns problems or deflects them, and whether they are able to be honest with a potential employer about things that went wrong. A candidate who cannot identify any failures is not credible; a candidate who identifies failures and explains what they learned and what changed as a result is usually someone worth taking seriously.

Ask how they would frame a significant regulatory risk to the board of this firm — and give them a specific, moderately complex scenario. The quality of their answer reveals both their technical assessment capability and their communication ability. A candidate who responds in regulatory language without translating it into board-level terms is showing you exactly what their board reports will look like.

Further questions worth asking

• “Walk me through the compliance monitoring plan you would build for your first year here, given what you know about our permissions.”
• “How have you evidenced good customer outcomes under the Consumer Duty, and what did your last annual board report conclude?”
• “Tell me about a financial promotion or product you stopped or changed. How did you explain it to the people who wanted it?”
• “What would you need from us in resources and information to sign off your statement of responsibilities with confidence?”
• “Describe your last direct contact with an FCA supervisor. What was the issue and how did you handle it?”

Questions for a fractional candidate

• “Which other firms do you act for, which SMFs do you hold there, and how many days does each take?”
• “If we have an urgent issue on a day you are working for another client, what happens?”
• “What support would you expect below you so that you are overseeing rather than doing everything?”
• “At what point would you tell us that one or two days a week is no longer enough?”

The last question is one of the most revealing. A good fractional SMF16 has a clear view of the limits of the model and will raise it before the FCA does.

The FCA approval timeline for SMF16

The FCA must decide an SMF16 application within three months of receiving a complete Form A, and the clock can pause while it waits for further information. Alongside that statutory deadline, the FCA has set a target of deciding at least half of senior manager applications in no more than 35 days, and the Government has confirmed plans, through the Financial Services and Markets Bill, to cut the statutory deadline to two months. Until that legislation is in force, plan on three months. In practice, applications that are well-prepared — with complete regulatory references, a clear statement of responsibilities, and a proposed SMF16 who matches the role specification precisely — tend to move through the FCA’s process more smoothly than applications with gaps or complications. Our article on how long FCA SMF approval takes sets out a realistic end-to-end timetable.

The approval timeline has important implications for search. If the firm is replacing a departing SMF16, the permanent appointment may not be in post for several months from the point of offer acceptance once notice periods and approval are added together. An interim SMF16, covering under the 12-week rule while the firm submits the application, provides regulatory continuity while the permanent process runs. If the firm is making its first SMF16 appointment as part of a new authorisation application, the proposed SMF16 must be named in the application and their fitness and propriety assessed alongside the firm’s authorisation; rushing this appointment creates application risk.

What the SMCR reforms change for SMF16 hiring

SMCR is being reformed in two phases, and both affect how firms plan an SMF16 appointment.

Phase 1 is in force. The FCA’s PS26/6 and the PRA’s PS12/26 made most of their changes from 24 April 2026. For SMF16 hiring the most important are the change to the 12-week rule (the window is now for submitting the application, not for obtaining approval), the extension of criminal record check validity from three to six months, and the expectation that firms aim to provide regulatory references within four weeks.

Phase 2 is out for consultation. The FCA’s CP26/37 and the PRA’s CP14/26 were published on 22 October 2026 and close on 22 January 2027. The proposals would delete the Certification Regime, move a group of roles — including SMF5 Head of Internal Audit and the committee chair functions — from pre-approval to notification, remove SMF18 and SMF22, and extend the 12-week rule to 18 weeks. SMF16 and SMF17 are not among the functions proposed for notification, so they would remain subject to FCA pre-approval. Final rules are expected in 2027 and depend on the legislation passing, so firms should plan current appointments on the rules in force today.

The first 90 days for a new SMF16

The first three months set the tone for the whole appointment. A strong SMF16, full-time or fractional, will usually work through three stages.

Days 1 to 30: understand the firm

Read the permissions, any variations or requirements on the firm, recent correspondence with the FCA, the breaches and complaints registers, previous compliance monitoring reports and the latest Consumer Duty board report. Meet each director and the people who run the regulated activities. Confirm the statement of responsibilities reflects the role as it really operates. A fractional SMF16 will compress this, but should not skip it.

Days 31 to 60: find the gaps

Produce a candid gap analysis against the firm’s obligations, ranked by risk. Draft a risk-based compliance monitoring plan for the year, set out the management information the board will receive and how often, and identify any resource the function needs. This is the moment to raise resource concerns formally, while the appointment is new and the board is listening.

Days 61 to 90: agree the plan

Present the gap analysis and monitoring plan to the board for approval, fix the quick wins, and set the reporting rhythm that will carry through the rest of the year. By day 90 the board should know what the main regulatory risks are, what is being done about them, and when it will next hear from its SMF16. If that is not clear, the appointment is not yet working.

The most common mistakes in SMF16 appointments

Promoting internally without assessing whether the individual can operate at SMF16 level is the most frequent mistake. A competent compliance manager who has worked well within a compliance framework built by someone else may not have the experience, seniority, or board presence to build and own a framework as SMF16. The promotion is appealing — it is cheaper, faster, and avoids the disruption of an external hire — but the wrong appointment at SMF16 level is more expensive than the right external hire.

Prioritising sector familiarity over regulatory judgement produces appointments that know the right rules but cannot navigate the regulatory relationship. An SMF16 who has deep knowledge of a particular FCA rulebook but cannot manage a supervisory conversation with their FCA supervisor, or who cannot hold a board-level position under commercial pressure, will create problems that sector familiarity cannot solve.

Underspecifying the role in the brief to the search firm generates a shortlist that is too broad. The difference between a Head of Compliance who is adequate for the firm’s current regulatory environment and one who can grow with the firm’s risk profile is a difference in specific experience and capability that needs to be articulated in the brief, not discovered by interview. Being specific about the FCA sub-handbook that matters most, the nature of the supervisory relationship the firm has, and the specific compliance challenges on the horizon produces a better shortlist and a better appointment.

Appointing a fractional SMF16 without checking their capacity is the newest mistake, and it is becoming more common as the fractional market grows. A candidate who is excellent on paper but already holds SMFs at several other firms may struggle to give yours the attention it needs, and the FCA will ask the question if you do not.

Frequently asked questions

What is a fractional compliance officer?

A fractional compliance officer is an experienced compliance leader who works for a firm part-time on an ongoing basis, typically one or two days a week, and often holds the SMF16 function (and sometimes SMF17) for that firm. They are approved by the FCA in the same way as a full-time holder and carry the same personal accountability.

Can a part-time or fractional person hold SMF16?

Yes. SMCR does not require the SMF16 holder to be full-time or an employee. The firm must show the FCA that the individual has enough time and resources to discharge the function, so disclose their other roles and explain how the arrangement works.

Can one person hold SMF16 and SMF17?

Yes, and in smaller firms a combined SMF16/17 is common. It works where the AML risk and the overall compliance workload are manageable for one person within the time they have. Where financial crime risk is material, splitting the roles is usually safer.

What is FCA Form A?

Form A is the application a firm submits through the FCA’s Connect system to have an individual approved for a senior management function such as SMF16. The firm, not the candidate, makes the application, supported by a criminal record check, regulatory references and a statement of responsibilities.

How long does FCA approval take for an SMF16?

The statutory deadline is three months from a complete application, and the FCA aims to decide at least half of senior manager applications in no more than 35 days. Incomplete applications, missing references and undisclosed issues are the usual causes of delay.

What does fixed income compliance involve for an SMF16?

At a fixed income broker or dealer, the SMF16 oversees the conduct rules that matter most in wholesale bond and credit markets: market abuse surveillance and suspicious transaction reporting, best execution, conflicts of interest, client categorisation, transaction reporting and record keeping, and the firm’s systems and controls for traders. Candidates should have held compliance roles in wholesale markets rather than retail.

Does every FCA-regulated firm need an SMF16?

No. It is a required function for Core and Enhanced SMCR firms and for dual-regulated firms. Limited Scope firms usually rely on SMF29 instead, and payment and e-money institutions authorised only under their own regulations are outside SMCR, although they still need competent compliance leadership and an MLRO.

What happens if our SMF16 leaves suddenly?

Notify the FCA and arrange cover. Under the 12-week rule someone can cover a temporary or reasonably unforeseen absence without approval, and the application for the replacement must be submitted within those 12 weeks. An interim SMF16 is the usual solution while the permanent or fractional search runs.

Will the Phase 2 SMCR reforms remove pre-approval for SMF16?

Not on the current proposals. CP26/37 would move several roles to notification, but SMF16 and SMF17 are not among them, so they would still need FCA approval before the holder starts.

Related Guides and Services

• Head of Compliance Recruitment (SMF16) — our FCA compliance leadership search service
• SMF17 MLRO Hiring Guide — hiring guide for the Money Laundering Reporting Officer function
• MLRO Recruitment — permanent and interim MLRO search across all regulated sectors
• Fractional Compliance Officer — part-time compliance leadership for smaller FCA firms
• Chief Risk Officer Recruitment — CRO appointments for regulated and corporate businesses
• FCA Regulated Firm Recruitment — all senior management function appointments

Sources

• FCA — Senior Managers and Certification Regime (SMCR)
• FCA — PS26/6: Senior Managers and Certification Regime review
• FCA — Prepare to apply for a senior manager function
• FCA Handbook — SYSC: Senior Management Arrangements, Systems and Controls
• FCA — PS18/14: Extending the Senior Managers and Certification Regime to all FCA firms
• Proceeds of Crime Act 2002
• FCA — Skilled person reviews
• Institute of Chartered Accountants in England and Wales (ICAEW)

SMF16 Recruitment | MLRO Recruitment | FCA Regulated Firms | Fractional Compliance Officer | CRO Recruitment