How Many Days Does a Fractional SMF16/17 Need?

“How many days a month do we actually need?” is the question firms ask last and should ask first. It determines the cost, the calibre of person you can attract, and whether the arrangement survives its first supervisory visit.

Most firms arrive at a number by working backwards from budget. The number that results is almost always too low, and the consequences surface months later as a monitoring programme that was never completed or an MLRO quietly deciding fewer things than they should.

This is how to size it properly.

Start With the Work, Not the Budget

There is a floor of activity that exists regardless of how small the firm is, because the obligations do not scale down to nothing.

A compliance monitoring programme has to be designed, run and reported on. The board needs papers it can actually use. Staff need training and the training needs recording. Policies need periodic review and the reviews need evidencing. For a firm with an MLRO function, there is the annual report, the business-wide risk assessment, and whatever flow of alerts and escalations the business model produces.

Before thinking about days, list those items against a calendar. Most firms find the annual cycle is lumpier than they assumed — quiet months and then a concentration around the monitoring programme and the annual reports.

A Worked Example: Small Directly Authorised Firm

Take an insurance intermediary or mortgage broker with a single product line, modest volume and no remediation history. A realistic annual shape looks something like this.

The compliance monitoring programme is the largest single item: designing it, executing the testing across the year, and writing it up. Spread across twelve months that is rarely less than a day a month on its own once the testing is genuine rather than nominal.

Board reporting adds a half day per cycle. Policy review, training and file checks occupy another half to a full day a month depending on headcount. Regulatory change monitoring — reading what has been published and working out whether it affects the firm — is an hour or two that firms almost never budget for and that is the first thing dropped when days are short.

Add the ad hoc questions, which are unpredictable but not zero, and two to three days a month is the honest range. Firms buying one day a month at this profile are buying attendance rather than a function.

A Worked Example: Firm in Authorisation

A firm going through authorisation, or in its first year after it, needs materially more and needs it front-loaded.

The application itself consumes time: policies to write rather than review, a compliance framework to design from nothing, and responses to the regulator’s questions on a timetable the firm does not control. The first year after authorisation then carries the first full monitoring cycle, the first annual reports, and the discovery that several things designed on paper do not work in practice.

Firms that budget steady-state days for this period are the ones whose applications stall. SMF Capital covers the appointment side of this through SMF authorisation support, and FD Capital’s note on SMF appointments during FCA authorisation explains how the two processes interact.

A Worked Example: Payments Firm With Growing Volume

This is where fractional arrangements break, and they break on the MLRO side first.

Compliance Oversight work scales with complexity. MLRO work scales with transactions. A payments business can double its volume without changing its product at all, and the compliance monitoring programme looks much the same while the alert queue, escalations and source of funds enquiries triple.

The practical signal is that the holder is spending their days on alerts and never reaching the monitoring programme. At that point the firm does not need more days — it needs the functions split, with the MLRO role moving towards full-time. FD Capital’s page on fractional dual SMF16 and SMF17 covers where that line sits, and SMF17 recruitment covers the permanent end.

The Number Firms Quote Us Most Often

One day a month is the figure we hear more than any other, and it is almost always the budget talking rather than an assessment of the work.

It persists because it sounds reasonable and because nothing visibly breaks for a while. A single day a month is enough to attend, to answer questions, and to produce something that looks like a board paper. It is not enough to run a monitoring programme that would survive scrutiny, and the gap between those two things takes months to become apparent.

When we push back on it, the honest objection is usually that the firm cannot see where more days would go. That is a fair challenge and it has a straightforward answer: ask the candidate to map the annual cycle and show you. If the work genuinely fits into twelve days a year, a good candidate will tell you so and you will have bought certainty cheaply.

Why Too Few Days Is Worse Than Too Few Pounds

An underfunded compliance function does not fail visibly. It fails by omission — testing that was sampled more lightly than it should have been, a policy review deferred, regulatory change that was not read.

None of that is apparent from the outside until something is looked at. And when it is looked at, the firm cannot point to the budget as mitigation, because the obligation sat with the firm throughout.

There is also a retention dimension. Experienced fractional holders leave arrangements that are scoped unrealistically, because they are carrying personal accountability for work they are not being given time to do. The firm then repeats the search, loses continuity, and pays the recruitment cost twice.

What the Days Buy You in Seniority

There is a trade-off firms rarely make explicit: the same annual spend buys either a lot of days from a junior person or a few days from a senior one.

For most small regulated firms the second is the better purchase, and the reason is not technical competence. It is that the value of a compliance appointment concentrates in a small number of moments — the decision not to onboard a client, the escalation that was uncomfortable, the conversation with a supervisor that went well rather than badly. Those moments need someone with the standing to be unpopular and the pattern recognition to know when something matters.

A holder with twenty years behind them and several other clients can say no in a way that someone early in their career, dependent on a single engagement, structurally cannot. That independence is a feature of the arrangement rather than a personality trait, and it is most of what you are buying.

The counter-argument is availability, and it is a real one. A senior fractional holder at three days a month is not going to answer every question the same afternoon. Firms that need constant hand-holding on routine matters may genuinely be better served by more junior capacity with senior oversight above it — but that is a two-part structure, and should be designed as one rather than arrived at by accident. FD Capital’s compliance salary guide carries benchmarks for both ends.

Minimum Days Versus Unlimited Availability

The structure of the engagement matters as much as the number.

The arrangement that works is an agreed minimum number of days a month, with a mechanism for additional days when something unusual happens. The arrangement that generates friction is an informal retainer where the firm assumes continuous availability and the holder absorbs whatever arrives.

The second version always ends the same way: either the holder starts declining things, or they resign. Agreeing a minimum and a mechanism up front costs one awkward conversation and prevents a dozen.

What to Ask a Candidate

Ask any experienced candidate to size the role themselves before you tell them your number. Someone who has held the function will walk through the annual cycle and arrive at a figure; someone who simply agrees with whatever you propose has either not thought about it or is not planning to do the work.

Ask what they would drop if the days turned out to be insufficient. The answer tells you how they prioritise under pressure, which is the single most useful thing to know about a compliance appointment.

And ask how many other senior management functions they hold. Capacity is a genuine constraint, the regulator has shown interest in it, and the question is easier asked now than discovered later. SMF Capital’s piece on holding SMF16 at more than one firm covers the position.

Reviewing the Number

Whatever you agree will be wrong eventually, because the firm will change. The arrangements that work build in a review — annually, or on a trigger such as volume crossing a threshold, a new product, or a change in regulatory status.

Reviewing on a planned basis is a routine conversation. Reviewing because a supervisor has raised it is not.

The Bottom Line

Size the role against the annual cycle of work that has to happen, not against what the firm hoped to spend. For most small directly authorised firms the honest answer is two to three days a month; for firms in authorisation or growing quickly it is more, and front-loaded.

The firms that get this right are not the ones spending most. They are the ones that listed the work, asked a candidate to size it independently, agreed a minimum rather than an assumption, and set a date to look at it again.