Statements of Responsibilities at FCA Firms

Statements of Responsibilities: Best Practice for FCA-Regulated Boards

The Statement of Responsibilities is both a regulatory document and a governance instrument. It is the document that gives the Senior Managers Regime its practical meaning at the individual level — translating the general accountability framework into a specific, named description of what each Senior Manager Function holder is personally responsible for within their firm. Poorly drafted Statements of Responsibilities create ambiguity, overlap and gaps in the firm’s accountability map. Well-drafted ones provide genuine clarity about who is accountable for what — and that clarity protects both the firm and the individual in the event of regulatory scrutiny.

Despite their importance, Statements of Responsibilities at many regulated firms are treated as administrative requirements rather than governance tools. They are drafted to satisfy the Form A submission process, updated only when a structural change forces a revision, and rarely reviewed for accuracy against the individual’s actual current responsibilities. This guide sets out what best practice looks like and how boards and senior managers should approach the drafting and maintenance of Statements of Responsibilities.

The Legal and Regulatory Framework

The requirement for Statements of Responsibilities is set out in SUP 10C of the FCA Handbook for FCA-solo regulated firms and in PRA rules for firms that are dual-regulated. Each individual approved to a Senior Management Function must have a Statement of Responsibilities that sets out the aspects of the firm’s affairs for which they are responsible. The SoR must be submitted to the FCA as part of the Form A application and updated whenever there is a material change in the individual’s responsibilities.

The FCA also requires each regulated firm to maintain a Management Responsibilities Map — a document that shows how responsibilities across all senior management functions are allocated across the firm and how they connect to the firm’s governance and committee structure. The SoR for each individual SMF holder must be consistent with the Management Responsibilities Map, and the two documents should be reviewed together whenever either is updated.

Under the Duty of Responsibility, an SMF holder who faces enforcement action must demonstrate that they took reasonable steps to prevent a regulatory breach in their area of responsibility. The Statement of Responsibilities defines what that area of responsibility is. An SoR that is too narrow may mean the individual is not accountable for matters that were genuinely within their purview; an SoR that is too broad may create accountability for matters that were beyond the individual’s actual authority or knowledge. Neither extreme serves the firm or the individual well.

What a Statement of Responsibilities Must Cover

There is no prescribed format for Statements of Responsibilities, but the FCA expects them to contain sufficient detail to make clear what the individual is specifically accountable for. A statement that simply lists the individual’s job title and a generic description of their functional area — “the Chief Risk Officer is responsible for risk management at the firm” — does not meet the standard. The FCA expects SoRs to be sufficiently granular to enable it to identify, in the event of a problem, which individual was accountable for a specific area and whether they discharged that accountability appropriately.

Effective Statements of Responsibilities typically cover: the individual’s primary functional responsibilities by area; their oversight responsibilities for specific teams, committees or processes; their accountability for specific regulatory obligations (for example, the CEO’s responsibility for the firm’s relationship with the FCA, or the CRO’s responsibility for the firm’s risk appetite framework); and the boundaries of their accountability — what is within their scope and what is delegated to, or held by, another SMF function holder.

Where responsibilities are shared between two SMF holders — for example, where the CEO and COO share accountability for operational resilience — the SoR should make clear how that shared accountability works in practice. The FCA will be sceptical of SoRs that attribute identical responsibilities to two individuals without explaining how decisions are made and how accountability is allocated in practice.

Common Drafting Mistakes

The most common mistakes in drafting Statements of Responsibilities are: excessive vagueness (using high-level functional descriptions without specifying what the individual is actually responsible for doing); excessive comprehensiveness (listing every conceivable activity under the SMF holder’s broad remit without distinguishing between primary accountability and oversight); failure to reflect actual current responsibilities (using an SoR drafted at appointment that no longer reflects the individual’s role after subsequent structural changes); and failure to align with the Management Responsibilities Map (creating inconsistencies between the firm-level map and the individual-level statements).

A subtler drafting mistake is the use of language that implies accountability where genuine authority does not exist. An SoR that states the Chief Risk Officer “is responsible for ensuring the firm’s risk appetite is not exceeded” without also reflecting the CRO’s authority to escalate concerns and challenge business decisions is creating an accountability gap — the individual is nominally accountable for an outcome they may lack the authority to control. The FCA pays attention to whether the accountability documented in the SoR is matched by genuine authority in the firm’s governance structure.

Updating Statements of Responsibilities

The obligation to update an SoR when there is a material change in an individual’s responsibilities is clear in the rules, but “material change” is not always easy to identify in practice. Structural reorganisations that transfer team reporting lines, changes in committee membership, acquisitions that bring new regulated activities within the SMF holder’s scope, and departures of other SMF holders that result in responsibilities being absorbed — all of these can constitute material changes that require SoR updates.

Best practice is to review all Statements of Responsibilities whenever the firm’s governance structure changes — including when a new SMF appointment is made, since the new individual’s SoR necessarily has implications for the existing SMFs around them. Reviewing SoRs only when a new Form A is triggered means that the firm’s accountability documentation drifts progressively out of date between appointments, which creates risk at the firm level and for individual SMF holders.

The Bank of England and Financial Services Act 2016 introduced the requirement for firms to have SoRs updated whenever there is a material change, but the practical implementation of this requirement varies widely. Firms with a mature SMCR compliance function typically have a formal SoR review process embedded in their governance calendar. Firms that treat SoRs as one-off documents rarely maintain the level of accuracy that the regulation requires.

Statements of Responsibilities at Smaller Regulated Firms

At smaller regulated firms — including many solo-regulated FCA firms — the SMF population is small and individual holders may cover broad areas of responsibility. This creates a particular challenge for SoR drafting: the individual may genuinely be accountable for a very wide range of matters, but documenting all of them in a single SoR can produce a document that is too broad to be meaningful. The alternative — being selective about what is included — risks creating gaps that leave matters unaccounted for in the firm’s accountability map.

The answer at smaller firms is typically to be specific about the most important regulatory obligations within each SMF holder’s remit — the areas where regulatory risk is highest and where personal accountability is most material — and to use the Management Responsibilities Map to provide the broader context for each individual’s SoR. This approach produces documents that are meaningful rather than comprehensive and that can be used practically in governance discussions rather than simply filed as regulatory submissions.

SoRs and the Candidate Conversation

From a search and appointment perspective, the Statement of Responsibilities is a tool that should be shared with prospective candidates before they accept a role at a regulated firm. A candidate who understands what the SoR will say about their personal accountability before they sign the employment contract is making an informed decision about the regulatory risk they are accepting. A candidate who only reviews the SoR at the point of Form A submission — when the offer has already been accepted and the notice period served — has had no opportunity to negotiate its scope or to raise concerns about aspects of the accountability that they believe are inappropriate.

Exec Capital advises its clients to prepare a draft SoR early in the appointment process and to share it with the preferred candidate as part of the due diligence phase. This produces better outcomes for both the firm and the individual — the firm gets a clearer indication of whether the candidate fully understands and accepts the regulatory accountability the role carries, and the candidate can make an informed decision with full transparency about what they are committing to.

Working with Exec Capital

Exec Capital’s experience of working through SMF appointment processes means we have a practical understanding of how Statements of Responsibilities should be drafted for different firm types and seniority levels. We advise our clients on SoR drafting as part of the appointment process and work with the firm’s compliance and legal advisers to ensure the final document is accurate, proportionate and aligned with the Management Responsibilities Map. All advice on regulated firm appointments is delivered personally by Adrian Lawrence FCA on 0203 834 9616.