As laid out in SUP 10C, Senior Management Functions must be allocated to the most senior individual within the firm who has responsibility for a particular issue. That individual should have an appropriate level of competence and experience to actually discharge his or her duties. However, it is important to note that if a firm does not currently have an individual performing a role that would be an SMF, it is not necessary to create that role just so that the SMF can be allocated.
In most cases, Senior Management Functions should not be shared or divided.
Senior Management Functions are split into:
- Governing Functions
- SMF1 (Chief Executive)
- SMF3 (Executive Director)
- SMF27 (Partner)
- Governing Function: Non-executive
- SMF9 (Chair)
- Required Functions
- SMF16 (Compliance Oversight)
- SMF17 (Money laundering reporting officer)
- SMF29 (Limited scope function) – Limited scope firms only.
See the table below for more information
| Type | Description of FCA controlled function |
|---|---|
|
FCA governing functions |
SMF 1: Chief Executive |
|
SMF 3: Executive Director |
|
|
SMF 7: Group entity senior manager |
|
|
SMF 10: Chair of the governing body |
|
|
SMF 11: Chair of the audit committee |
|
|
SMF 12: Chair of the remuneration committee |
|
|
SMF 14: Senior independent director |
|
|
SMF 15: Chair with profits committee |
|
|
SMF 19: Head of third country branch |
|
|
SMF 27: Partner |
|
|
FCA required functions |
SMF 16: Compliance oversight |
|
SMF 17: Money Laundering reporting |
|
|
SMF 18: Other overall responsibility |
|
|
SMF 22: Other local responsibility |
|
|
SMF 23b: Conduct risk oversight (Lloyd’s) |
|
|
SMF 29: Limited scope |
|
|
Other high-level management functions |
SMF 21: EEA branch senior manager |
|
Systems and controls functions |
|
|
SMF 2: Chief Finance Officer (CFO) |
|
|
SMF 4: Chief Risk Officer (CRO) |
|
|
SMF 5: Head of internal audit |
|
|
SMF 24: Chief of Operations (COO) |
Senior Manager Functions by type of firm
The Senior Management Functions that exist for each SM&CR firm type are summarised in more detail below:
| SMF number | SMF role | Banks | Limited scope | Core | Enhanced | EAA branch | Non-EAA branch |
|---|---|---|---|---|---|---|---|
|
1 |
Chief Executive Function |
X |
|
X |
X |
|
|
|
2 |
Chief Finance Officer Function |
X |
|
X |
X |
|
|
|
3 |
Executive Director |
X |
|
X |
X |
|
X |
|
4 |
Chief Risk Officer Function |
X |
|
|
X |
|
|
|
5 |
Head of Internal Audit Function |
X |
|
|
X |
|
|
|
6 |
Head of Key Business Area |
X |
|
|
Insurers Only |
|
|
|
7 |
Group Entity Senior Manager |
X |
|
|
X |
|
|
|
8 |
Credit Union Senior Manager |
X |
|
|
|
|
|
|
9 |
Chair of the Governing Body Function |
X |
|
X |
X |
|
|
|
10 |
Chair of the risk committee function |
X |
|
|
X |
|
|
|
11 |
Chair of the audit committee function |
X |
|
|
X |
|
|
|
12 |
Chair of the remuneration committee function |
X |
|
|
X |
|
|
|
13 |
Chair of the nominations committee |
X |
|
|
X |
|
|
|
14 |
Senior independant director function |
X |
|
|
X |
|
|
|
15 |
Chair of the with-profits committee function |
|
|
|
|
|
|
|
16 |
Compliance Oversight |
X |
X |
X |
X |
|
X |
|
17 |
Money Laundering Reporting Officer (MLRO) |
X |
X |
X |
X |
X |
X |
|
18 |
Other overall responsibilites |
X |
|
|
|
|
|
|
19 |
Head of Third Country Branch function |
|
|
|
|
|
X |
|
20 |
Head of Actuarial |
|
|
Insurers only |
Insurers only |
|
|
|
21 |
EAA Branch Senior Manager |
|
|
|
|
X |
|
|
22 |
Other Local Responsibilty |
|
|
|
|
|
X |
|
23b |
Conduct risk oversight (Lloyd's) |
|
|
|
|
|
|
|
24 |
Chief Operations function |
|
|
|
X |
|
|
|
27 |
Partner |
|
|
X |
X |
|
|
|
29 |
Limited Scope Function |
|
X |
|
|
|
|
- Red text = FCA governing function
- Green text = FCA required function
- Orange text = Systems and control function
- Blue text = other high-level management function
In particular, the Senior Management Functions that are required for various Limited Scope firms is summarised in this table:
| Limited Scope Firm | SMF16 (Compliance oversight) | SMF17 (MLRO) | SMF29 (Limited scope function) |
|---|---|---|---|
|
Limited permission consumer credit firms that currently have a CF8 (apportionment and oversight function) under the approved persons regime |
No |
No |
Yes |
|
Sole traders with no employees |
Yes |
No |
No |
|
Authorised professional firms whose only regulated activities are non-mainstream regulated activities |
Yes |
Yes |
Yes |
|
Oil market participants, service companies, energy market participants, subsidiaries of local authorities or registered social landlords. |
Yes |
Yes |
Yes |
|
Insurance intermediaries whose principal business is not insurance intermediation and who only have permission to carry on insurance distribution activity in relation to non-investment insurance contracts. |
No |
No |
Yes |
Non-executive Directors (“NEDs”)
NEDs of a firm subject to the SM&CR will not normally need to be Senior Managers or require FCA approval (unless they are also the Chair (SMF9) of the firm).
However, NEDs have to be assessed as fit and proper to perform their role and will remain subject to the Conduct Rules.
Heads of Legal
The Head of Legal does not need to approved as a Senior Manager (although that individual may still require approval as a Senior Manager if he/she also has responsibility for a different area of the business e.g. Compliance).
