Senior management functions

Learn about senior management functions (SMFs) and how we assess them.

SMFs are a type of controlled function carried out by approved persons[1]. Anyone who performs an SMF needs to be approved by us before they can start their role.

We call the people who hold these functions Senior Managers. They are the most senior people in a firm with the greatest potential to cause harm or impact upon market integrity. We make particular functions SMFs so that we know who a firm’s most senior decision makers are, and to make sure firms clearly allocate responsibilities to those individuals.

SMFs apply to UK-authorised firms and EEA branches. Which ones apply to you will depend on what type of SM&CR firm[2] you are.

Examples of SMFs include being:

an executive director of a regulated firm
responsible for compliance with our rules
responsible for overseeing the firm's compliance against money laundering

Approving individuals for SMFs

An individual can hold more than one SMF – for example, a director can perform the director function and the compliance oversight function – but in your firm's application you must show that the individual can manage multiple roles.

Different SMFs apply to different businesses, depending on what activities they do. We wouldn't expect a single Senior Manager to hold all of your firm's required SMFs.

The number of SMFs your staff will need to be approved for will depend on the:

activities you intend to carry out
legal entity of your business
permissions you require

You probably won't be able to outsource these roles and still meet the standards we expect, but we'll assess this on a case-by-case basis. You can, however, outsource resources for guidance and support for approved persons.

See our guidance on how to apply to us to approve an individual or firm[3].

How we assess applicants for SMFs

Only individuals with the appropriate skills and behaviours should be appointed to hold SMFs.

We also expect firms to have balanced and effective boards, with a competent executive team.

We assess applicants for key positions to make sure they are up to the job and that they carry out their role effectively. In some cases, for example SMFs in higher-impact firms, we may also ask to interview the candidate.

If your firm is applying for an individual to hold an SMF, use our guidance below about the evidence we need to see, what an interview would involve and considerations for dual-regulated firms.

Evidence we need to see

In your application, your firm should demonstrate that it has a robust recruitment process and that it carries out the appropriate level of due diligence on all its candidates.

For SMFs you should also consider providing:

CV
statement of responsibilities
confirmation of a clear criminal records check
confirmation of clear regulatory reference(s)
management responsibility map(s)
handover procedures
role specification
organisation chart(s)
board/executive team biographies
recruitment, referencing, interview and appointment processes
skills gap analysis
learning and development plan
competency assessment

The interview

We may decide to interview any SMF candidate. Typically an interview may be required for these positions:

chairperson
senior independent director
chair of risk or audit committee
chief executive officer (group or UK)
risk director/chief risk officer
finance director/chief finance officer (solo-regulated firms)
compliance oversight
individual with CASS oversight

However, if we have concerns about an individual’s fitness and propriety or about their firm, we can choose to interview for a role at any level or at any firm.

We expect people to understand and be able to fully explain their regulatory responsibilities, their role and how their knowledge or experience equips them to carry out these functions.

The interview also looks at awareness and understanding of:

the market which the firm operates in
the firm’s business model and strategy
risk management and control
financial analysis and controls (for solo-regulated firms)
governance, oversight and controls
our regulatory framework, requirements and expectations
the culture of the firm, including its diversity and inclusion programmes
the firm’s implementation of our Consumer Duty[4]

The members of the interview panel will be determined by the firm type and role, and will usually include representatives from our Authorisation and Supervision departments, as well as a senior adviser.

If we're satisfied with the person’s fitness and propriety

We will approve the application and confirm this in writing.

If we're not satisfied

We will tell the firm and explain the next steps. These may be to refuse the application or invite the person to attend a second interview.

PRA approvals

For dual-regulated firms, the Prudential Regulation Authority (PRA)[5] leads on reviewing applications for PRA-designated SMFs but it needs our consent first. Without this, the PRA has to refuse the application.

If we and the PRA request an interview, we may do this as 1 joint interview or have 2 separate interviews.

08/12/2022 : Editorial amendment Updates to page features for website refresh.

First published: 12/05/2015 Last updated: 08/12/2022 See all updates