An approved person resigning is not a vacancy in the ordinary sense. When a Compliance Oversight holder or an MLRO hands in notice, the firm acquires a notification obligation, a countdown and a gap in a function the regulator expects somebody to be performing. What the firm does in the first two weeks largely determines whether the next three months are orderly or painful.
Most firms spend those two weeks doing the wrong things: trying to talk the leaver round, waiting for the notice period to tell them something, or quietly hoping a successor will appear. This is what the fortnight should actually look like.
Days One to Three: Notify, and Write Down What You Have Lost
The notification is the first obligation and the easiest to get wrong by delay. A senior manager ceasing to perform a function is a reportable event, and leaving it until the leaving date because the person is still working their notice is a misreading of the requirement.
Alongside that, write down what the leaver actually does. Not the Statement of Responsibilities — the real list. Which reports do they produce and when. Which decisions wait for them. What is mid-flight: a monitoring programme part-completed, an open remediation item, a client file under review, a regulatory response in draft.
Firms that skip this step discover the contents of the role in fragments over the following months, usually when something has already been missed. It takes an afternoon while the person is still there and still cooperative, and it is the single highest-return thing you can do in week one.
Days One to Five: Understand the Twelve-Week Position Properly
The twelve-week rule allows an individual to cover a senior management function without approval in defined circumstances. It is genuinely useful and it is routinely misunderstood.
It is not twelve weeks of grace in which to think. It is a window for temporary cover while a permanent solution is arranged, it carries conditions, and it does not suspend the firm’s obligations in the meantime. Whoever steps in still has to do the job — the monitoring programme still runs, the SARs still need deciding.
It also does not stretch. Firms that treat week one as free and start searching in week four are not working with twelve weeks; they are working with eight, against an FCA approval process that frequently needs more than that. FD Capital’s page on temporary cover and the 12-week rule sets out the conditions in detail.
Days Three to Seven: Decide Who Is Covering, and Tell Them Properly
Internal cover is the usual first answer and it is often right, provided the person covering is told what they are taking on rather than asked to keep an eye on things.
The failure mode here is a nominal arrangement: someone senior is named, nobody briefs them, and the actual work quietly stops. For the MLRO function in particular, that is not an administrative gap. If nobody is making SAR decisions, the firm has a problem that compounds daily and is visible in any subsequent file review.
Where there is no credible internal candidate, external interim cover is faster than firms expect — an experienced holder who has done this before can usually be in place quickly, and the arrangement buys the time to run a proper permanent search rather than a panicked one. SMF Capital covers this through fractional and interim SMF cover.
Days Five to Ten: Start the Search, Not the Deliberation
This is where most firms lose their twelve weeks. The instinct is to work out what the firm wants before approaching the market: permanent or fractional, what seniority, what budget. Those are reasonable questions and they do not need answering before the search starts.
The binding constraint on the timetable is not finding a candidate. It is FCA approval, which begins only once you have one. Every week spent deliberating is a week added to the end, and the deliberation usually improves once you have seen who is actually available at what price.
Firms are also frequently wrong about what they need. A business that lost a full-time Head of Compliance often does not need to replace like with like — the role may have grown around the individual rather than around the obligation. A conversation with someone who sees these mandates weekly will settle it faster than an internal debate will. FD Capital sets out the options on its SMF16 recruitment and SMF17 recruitment pages, including when fractional beats permanent.
Days Seven to Fourteen: Handle the Handover While You Still Can
A leaver’s cooperation has a half-life. In the first fortnight most people are helpful; by the final week they are mentally elsewhere and the useful detail is harder to extract.
Use the time for the things only they know: the history behind a particular client relationship, why a control was designed the way it was, which supervisor contact knows the firm, where the monitoring programme has been running on judgement rather than documentation. Written handovers capture process. Conversations capture reasoning, and reasoning is what the successor will need.
If the departure is acrimonious, this window closes faster still, which is an argument for separating the commercial disagreement from the regulatory handover early and explicitly.
Tell the Board What the Position Actually Is
Boards are frequently told that a compliance officer has resigned and that a replacement is being sought, which is true and almost useless. What the board needs to know is which obligations are currently being discharged by whom, what is not being done at all, and what the realistic date is for a permanent appointment given the approval timetable.
That briefing is worth preparing properly in the first fortnight, for two reasons. It forces the firm to be honest with itself about the gap rather than carrying a comfortable assumption that things are covered. And if the regulator later asks how the firm managed the period, a contemporaneous board paper setting out the arrangements is a considerably better answer than a reconstruction after the fact.
It is also the moment when the resourcing conversation is easiest to have. A board looking at a written gap analysis approves interim cover far more readily than one being asked for budget in the abstract.
What Not to Do
Three things firms do in this fortnight that reliably make it worse.
Appointing the nearest available person to hold the title. A senior manager function carries personal accountability, and someone who has accepted it without understanding that is a liability to themselves and to the firm. Candidates who ask nothing about reporting lines or board access are the ones most likely to withdraw once they have thought about it.
Waiting for the notice period. Starting the search on the leaving date rather than the notice date routinely adds six to twelve weeks to the gap, because approval runs after the offer rather than alongside the notice.
Assuming a combined role can simply be split later. Where the leaver held both SMF16 and SMF17, the firm has lost two functions at once. Splitting them is often the right answer, but it is two searches and two approvals, not one.
If the Leaver Held Both Functions
Dual SMF16/17 holders are common at smaller firms and the resignation of one is the sharpest version of this problem. The firm is simultaneously without a compliance function and without an MLRO.
The useful question at that moment is whether the combined structure was still right. A firm that has grown since the arrangement was set up may find the departure is the natural point to separate the functions — unwelcome in the short term, but cheaper than discovering the same thing during a supervisory visit. FD Capital’s page on fractional dual SMF16 and SMF17 appointments covers where the line sits.
The Approval Clock
Everything above is driven by one fact: senior management functions are pre-approval roles, and the candidate cannot start until the FCA says so. That means a Form A, a Statement of Responsibilities and fit and proper evidence, and a timetable the firm does not control.
Candidates increasingly face an interview with the regulator as well, particularly at firms already receiving attention. Both are covered in FD Capital’s guides on how long FCA SMF approval takes and what to expect in an FCA SMF interview, and the mechanics of the application in Exec Capital’s Form A approval process guide.
The Bottom Line
The firms that come through an SMF resignation well are not the ones with the deepest bench. They are the ones that notified promptly, wrote down what the leaver actually did while they were still there, put real cover in place rather than a name on a chart, and started the search in week one instead of week four.
None of that requires a budget decision. All of it buys back the weeks that the approval process is going to consume regardless.
Lost an approved person?
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Interim cover to stop the gap, and a proper search alongside it. Tell us what the firm does and which function you have lost.
