Most regulated firms think about senior manager functions twice: once when they apply for authorisation, and again when someone resigns. In between, the question tends to drift. That is a mistake, because a firm’s senior manager needs change as it grows, and the hires that matter most are usually the ones that should have been planned a year earlier.
This article maps how SMF requirements typically evolve, from a newly authorised firm through to an Enhanced firm under the Senior Managers and Certification Regime, and sets out how to plan each stage so that hiring is never left until it is urgent.
Stage one: authorisation
The authorisation application is the first time the FCA meets the people who will run the firm. The application names the proposed senior managers, and each needs an approved Form A, assessed alongside the firm’s own application. For most new FSMA-authorised firms that will become Core firms, the core set of senior manager functions is:
- SMF1 Chief Executive, where the firm has one
- SMF3 Executive Director for other executive board members
- SMF9 Chair, where the firm has a board chair
- SMF16 Compliance Oversight
- SMF17 Money Laundering Reporting, where the Money Laundering Regulations apply
- SMF27 Partner, for partnerships
Firms with only limited permissions, such as limited permission consumer credit firms, are usually Limited Scope firms, where the senior manager regime is lighter and may centre on the SMF29 Limited Scope Function.
The hiring challenge at this stage is credibility. The FCA will look hard at whether the proposed senior managers have the experience to run a regulated business, and an application that names inexperienced or obviously part-time individuals without a convincing explanation tends to attract questions. The practical lesson is to recruit before you submit, not after.
Many new firms fill SMF16 and SMF17 with one experienced individual, often on a fractional basis while volumes build. That is a perfectly proportionate approach for a small firm, provided the time commitment is realistic and a deputy is in place for suspicious activity reporting.
Stage two: the established Core firm
Once a firm is operating, the senior manager population usually stays stable for a while, but the demands on it grow. Three things tend to change.
The workload behind SMF16 and SMF17 increases. More customers, more products and more regulatory change mean more monitoring, more Consumer Duty evidence and, for many firms, more suspicious activity reporting. The question of whether one person can still hold both functions becomes real.
The board matures. Many Core firms add independent non-executive directors as they grow. A board chair holding SMF9 becomes more common, and investors often expect stronger independent oversight.
Specialist needs appear. Firms that hold client money may need dedicated client assets expertise. Firms adding permissions, through a variation of permission, may need senior managers with experience of the new activity. Firms with significant operational complexity begin to need stronger operations and risk leadership, even before the formal SMFs for those roles apply.
The planning task at this stage is to watch for the point at which the original structure stops being proportionate, and to recruit before the FCA, an auditor or an investor points it out.
Stage three: approaching Enhanced
Enhanced firms are subject to the fullest version of the regime. Firms move into the Enhanced category by crossing certain thresholds, which the FCA raised by roughly 30% from 10 July 2026 following its SM&CR review policy statement (PS26/6). The revised thresholds include £65bn of assets under management, £45m of intermediary regulated business revenue and £130m of regulated consumer credit lending revenue. Certain other firms, such as those classed as CASS large firms, are also Enhanced.
Moving to Enhanced brings additional senior manager functions where relevant to the firm, which can include functions such as the Chief Finance function (SMF2), Chief Risk function (SMF4), Head of Internal Audit (SMF5), the committee chair functions (SMF10 to SMF13), the Senior Independent Director (SMF14), Other Overall Responsibility (SMF18) and the Chief Operations function (SMF24). Enhanced firms must also maintain a management responsibilities map and ensure that every business area and activity has a senior manager with overall responsibility for it.
For a growing firm, this is the stage where senior manager hiring most often goes wrong. A business that crosses a threshold during a strong year can find itself needing several new approved individuals at once, each requiring a search, references, a Form A and possibly an FCA interview. Firms that start planning when they are within sight of a threshold, rather than when they have crossed it, have far more options.
The timetable every SMF hire runs to
Whatever the stage, every new senior manager runs to roughly the same clock:
- Define the role. Agree the function, the prescribed responsibilities and the Statement of Responsibilities.
- Search and select. Permanent senior searches commonly take several weeks, and good candidates often have notice periods of three to six months.
- Complete fit and proper checks. Under PS26/6, regulatory references must now be provided within four weeks, and criminal records checks for a new SMF are valid for six months.
- Apply for approval. The statutory deadline for the FCA to determine a complete application is three months, and the FCA reports that the large majority are decided within that period.
- Onboard. The new senior manager needs time to understand the business, its risks and any open regulatory matters.
Added together, a permanent SMF hire can easily take six to nine months from the decision to recruit to a fully approved individual in post. That is why planning matters.
When a senior manager leaves unexpectedly
Resignations do not wait for a plan. When a senior manager leaves, the firm must notify the FCA, reallocate any prescribed responsibilities and arrange cover. The FCA’s reformed 12-week rule, in force since 24 April 2026, gives firms 12 weeks to submit an application for a replacement when an absence is temporary or reasonably unforeseen, and the person covering can continue until the FCA decides that application. The cover individual is subject to the Senior Manager Conduct Rules, and the FCA expects the rule to be used on a limited basis, with good succession planning covering most situations.
The firms that handle departures best are those with deputies already in place for their most critical functions, especially compliance oversight and money laundering reporting.
Common mistakes
- Naming placeholders at authorisation. Proposing senior managers who lack relevant experience, intending to replace them later, weakens the application and creates a second approval process soon after.
- Stacking functions on the CEO. Asking the chief executive to cover compliance oversight or money laundering reporting removes independent challenge and is likely to be questioned.
- Ignoring the thresholds. Firms that do not track their position against the Enhanced thresholds can find themselves out of step with the regime before they have recruited the people it requires.
- Skipping the register check. Every candidate’s history should be checked on the FCA Financial Services Register, and reference issues raised early, before an offer is made.
- Leaving Statements of Responsibilities out of date. Each time functions or prescribed responsibilities move, the documents should move with them.
A simple SMF planning checklist
- List every SMF your firm holds today and the individual holding it.
- For each, name a realistic deputy or successor.
- Check whether any individual holds more functions than their time allows.
- Track your position against the Enhanced thresholds and note when you might cross them.
- For any planned variation of permission, identify which senior managers it will require.
- Review the plan at least annually with the board.
Where to find specialist help
Because senior manager hiring combines recruitment with regulatory approval, firms increasingly use recruiters that focus specifically on FCA-regulated appointments. SMF Capital is one such specialist, recruiting senior managers across the designated functions for FCA-regulated firms, from compliance oversight and money laundering reporting through to chief executive, chair and committee chair roles. Its guide to which SMFs apply at which firm tier is a useful companion to this article for firms mapping their own requirements.
Whoever you work with, the principle is the same: treat senior manager hiring as part of your growth plan, not as an emergency response.
Frequently asked questions
Which senior manager functions does a new Core firm need?
Typically SMF1, SMF3, SMF9 where there is a chair, SMF16, SMF17 where the Money Laundering Regulations apply, and SMF27 for partnerships. The exact set depends on the firm’s structure and permissions.
When does a firm become Enhanced?
When it crosses one of the Enhanced thresholds or falls into another Enhanced category, such as being a CASS large firm. The thresholds were raised from 10 July 2026, including £65bn of assets under management, £45m of intermediary regulated business revenue and £130m of regulated consumer credit lending revenue.
How long does it take to appoint a new senior manager?
Allow for the search, the candidate’s notice period and FCA approval. Six to nine months from start to finish is common for a permanent appointment; interim cover can be arranged far more quickly.
Can one person hold more than one SMF?
Yes. At smaller firms one individual often holds both SMF16 and SMF17, for example. The individual must be approved for each function and have the time to perform them all.
