New FCA Governance Guides for Regulated Firm Boards

Our sister practice Exec Capital — which specialises in C-suite and board-level executive search, including an extensive specialism in senior appointments at FCA-regulated firms — has published a significant new series of Knowledge Centre guides covering the regulatory framework for board and senior management function appointments. The guides run to ten new knowledge pieces and six detailed blog posts, all written for boards, nomination committees and senior executives at FCA-regulated firms navigating the practical implications of the Senior Managers and Certification Regime.

The primary audience for the Exec Capital guides is boards and chairs appointing at board level. But several of the guides are directly and practically relevant to the CFOs, Finance Directors and senior finance function leaders who work in FCA-regulated environments — and whose own regulatory position, under the SMF2 designation, places them squarely within the governance framework these guides address. We have written this post to identify the guides most useful to FD Capital’s audience and to explain why the content matters to finance leaders operating in regulated firms, not just to the boards who appoint them.

Why the Regulatory Governance Landscape Matters More Now

The intensity of FCA supervision has increased considerably over the past three years. Consumer Duty came into force in 2023 and placed specific board-level governance obligations on all firms serving retail clients. The FCA’s supervisory approach to the Senior Managers Regime has become more granular — the regulator now pays closer attention to the quality of individual Statements of Responsibilities, the robustness of firms’ certification processes, and the adequacy of succession planning for senior management functions. And the expansion of SMCR to cover a broader range of firm types has brought a new population of regulated businesses into the personal accountability framework for the first time.

For CFOs and Finance Directors at regulated firms, this intensification has practical consequences. The expectations attached to the SMF2 designation have not changed formally, but the FCA’s willingness to scrutinise whether individual SMF holders are genuinely meeting those expectations has increased. An FD who treats their SMCR obligations as administrative compliance rather than genuine personal accountability is increasingly out of step with the regulator’s supervisory approach — and the Exec Capital guides provide a useful reference point for understanding what the framework actually requires at the individual level.

The SMF2 Dimension: Why CFOs and Finance Directors Need to Understand This Framework

The Chief Finance function — SMF2 — is one of the core senior management functions under SMCR. The FD or CFO at an FCA-regulated firm is not simply a financial professional in a regulated environment. They are a designated senior manager who has been personally approved by the FCA, who holds their own Statement of Responsibilities defining what they are personally accountable for, and who is subject to the Duty of Responsibility — meaning that if a regulatory failure occurs within their area of accountability, they must demonstrate they took reasonable steps to prevent it.

This is a fundamentally different accountability model from working as a finance leader at an unregulated business. The personal dimension is real, and the consequences of regulatory action against an individual SMF holder — fines, prohibition from working in regulated financial services, public censure — are career-defining. Understanding the framework within which you operate is not a compliance exercise for someone else to manage; it is a professional obligation for every SMF2 holder.

The Exec Capital guides address this framework from the board’s perspective, but the substance is directly applicable to any individual holding an SMF designation. The guides on Form A, Statements of Responsibilities, succession planning and dual SMF arrangements are equally relevant to the SMF2 holder as to the chair or CEO. We strongly encourage FD Capital clients and candidates who hold or are likely to hold SMF designations to use these guides as a reference.

FCA Form A: What Boards Need to Know

The FCA Form A guide is the most practically immediately useful of the Knowledge Centre pieces for any finance leader preparing to move into a new role at a regulated firm. The Form A application is the mechanism by which the FCA approves an individual for an SMF designation — including SMF2 for the CFO or FD function. The guide covers what the application requires, what regulatory references must contain, what material disclosures the individual is required to make, and how the FCA’s assessment of fitness and propriety works in practice.

For CFOs and FDs who are new to regulated environments — moving from a professional services, technology or industrial background into a regulated financial services business for the first time — the Form A process is often the first detailed encounter with the personal accountability framework, and it can be a significant source of uncertainty. The guide demystifies the process, sets realistic expectations for the timeline (typically six to twelve weeks for a standard application), and addresses the regulatory reference requirements that many candidates underestimate in terms of both their scope and their practical significance.

The guide also covers the regulatory interview — the FCA’s mechanism for directly assessing a proposed SMF holder’s understanding of their role and the regulatory environment. For a CFO moving into a complex or higher-risk regulated firm for the first time, the regulatory interview is a real possibility, and preparation for it should begin well before the Form A is submitted. The guide is a useful starting point for that preparation.

Statements of Responsibilities: Best Practice

The Statements of Responsibilities guide addresses the document that sits at the centre of every SMF holder’s personal accountability — including the SMF2 holder’s accountability for the firm’s finance function. The guide sets out what the FCA expects a Statement of Responsibilities to contain, what the common drafting mistakes are, and how to maintain and update the document as the individual’s responsibilities change over time.

For CFOs and FDs, the Statement of Responsibilities is not simply a regulatory submission produced by the compliance department at the point of appointment and filed away. It is a live document that defines the scope of their personal regulatory accountability — and if the document does not accurately reflect their actual current responsibilities, it creates a governance risk both for them personally and for the firm. An FD whose SoR was drafted on appointment and has never been updated to reflect changes in the firm’s structure, the individual’s scope, or the regulatory framework will find, in the event of supervisory scrutiny, that the gap between the document and reality is both visible and difficult to explain.

The guide’s discussion of how to draft SoRs that are specific rather than generic is particularly useful for finance leaders. The instinct to produce a broad, comprehensive SoR that captures everything the CFO is involved in frequently results in a document that is too vague to be meaningful — stating that the CFO “is responsible for the financial management of the firm” rather than identifying the specific regulatory obligations, committees, and governance processes for which they are personally accountable. The Exec Capital guide explains how to strike the right balance.

SMCR and Board Succession Planning

The SMCR succession planning guide is relevant to finance leaders in two distinct ways. First, as SMF2 holders, CFOs and FDs are subject to the succession planning obligations that apply to all senior management functions — the firm must have a plan for managing an FD departure, and the FD themselves has an interest in understanding how their own succession is being managed. Second, finance function leaders at regulated firms are frequently involved in the governance processes that underpin succession planning — preparing the financial projections for a period of leadership transition, managing the cost implications of interim coverage arrangements, or supporting the board’s assessment of the firm’s capacity to absorb the cost of a retained search for the replacement.

The guide addresses the realistic timeline for SMF succession — five to six months from initiating a search to an approved replacement being in post under favourable conditions, seven to nine months at more complex firms. For finance function leaders who are responsible for planning the cost and operational impact of a senior departure, this timeline reality is directly relevant. An unplanned FD departure that is managed without adequate successor planning can create both regulatory exposure (an extended SMF2 vacancy without compliant coverage) and significant unbudgeted cost. The guide helps boards and their finance leaders plan for this more effectively.

The Dual SMF Holder at Smaller Regulated Firms

The Dual SMF Holder guide is particularly relevant to FD Capital’s client base among smaller regulated firms — the growth-stage fintechs, payment institutions, boutique asset managers and newly authorised businesses where a single senior individual frequently covers multiple SMF designations. At many of the firms FD Capital works with in this segment, the fractional or part-time FD who holds the SMF2 designation may also hold other designated functions — making them a dual or multiple SMF holder whose regulatory position is more complex than that of a full-time FD at a larger firm.

The guide sets out which SMF combinations are permitted, what the FCA assesses in a dual SMF application, the governance risks of overloading an individual with designations they cannot genuinely fulfil, and how to identify the point at which a combined arrangement should be separated as the firm grows. For fractional and part-time FDs at regulated firms — a significant part of FD Capital’s specialist market — this is directly applicable guidance. An FD who holds SMF2 and additional designations on a fractional basis should understand both the regulatory permissions that make that arrangement possible and the governance expectations that make it sustainable.

Consumer Duty Annual Board Report

The Consumer Duty Annual Board Report guide addresses a governance requirement that has a specific and often underappreciated finance function dimension. The fair value assessment — one of the four Consumer Duty outcome areas — requires retail-facing regulated firms to demonstrate that the total cost of their products and services represents genuine value for the outcomes delivered to retail clients. This is an analytically demanding assessment that requires the CFO and finance function to produce the cost and revenue data on which the board’s fair value conclusions rest.

A board that produces a Consumer Duty annual report without robust financial analysis supporting the fair value section — or whose CFO has not been directly involved in the fair value assessment methodology — is producing a report that will not withstand FCA scrutiny. The guide explains what the board report must contain, what the FCA expects the board’s oversight role to involve, and what the fair value and other outcome assessments should look like. For CFOs at retail-facing wealth managers, insurers, consumer credit businesses and retail investment firms, this is governance content that directly affects their role in the annual reporting cycle.

The Broader Suite — Blog Posts Worth Reading

Alongside the Knowledge Centre guides, Exec Capital has published a series of blog posts directly addressing appointment and governance challenges at regulated firms. Several are particularly relevant to FD Capital’s audience:

Certification Regime vs Senior Managers Regime: Who Gets Approved, Who Gets Certified — a clear explanation of which employees fall into which regulatory tier. For CFOs responsible for overseeing their firm’s SMCR compliance, understanding the full population of staff subject to the regime — not just the SMF holders — is a governance requirement. This post sets out the distinction clearly.

CEO Succession at Regulated Firms: Timelines, FCA Engagement and Contingency Planning — highly relevant for FDs who are involved in governance discussions about CEO succession. The financial and operational planning that a CEO transition requires is the finance function’s domain, and the regulatory timeline realities in this post are directly relevant to that planning work.

First-Time SMF1: Hiring a CEO Who Has Never Held an SMF Role Before — relevant to any regulated firm considering a CEO search that might bring in a candidate from outside the regulated sector. The finance function’s perspective on this decision — understanding the regulatory risk implications of a first-time SMF1 appointment — is a legitimate board input.

How FD Capital and Exec Capital Work Together for Regulated Firm Clients

FD Capital and Exec Capital are sister practices with complementary but clearly defined positioning. FD Capital’s focus is the finance function — fractional CFO and Finance Director appointments, interim finance leadership, and permanent senior finance hires, including for FCA-regulated firms where the finance leader carries the SMF2 designation. Exec Capital’s focus is the broader C-suite and board — CEO, COO, CMO, CTO and NED appointments, with a particularly strong specialism in FCA-regulated firm executive and board-level search.

Where a regulated firm needs both a finance function leader and a senior executive or board appointment, both practices contribute their specialist knowledge to ensure the regulatory and governance dimensions of each appointment are properly integrated. The FD’s SMF2 designation and the CEO’s SMF1 designation interact directly in the firm’s governance structure — the Statement of Responsibilities for each must be drafted consistently, the Form A applications must be managed with awareness of each other’s timelines, and the interim coverage arrangements for both must be coordinated if transitions overlap.

The Exec Capital Knowledge Centre guides provide the regulatory governance reference material that underpins both practices’ work with regulated firm clients. We are pleased to share them with the FD Capital community and to encourage any finance leader who works in or is moving into an FCA-regulated firm to use them as a practical resource. The full suite is available at Exec Capital’s FCA regulated firm practice page.

If you are a CFO, Finance Director or fractional finance leader working in or considering a move to an FCA-regulated firm — or if you are a regulated firm seeking a senior finance leader — speak to FD Capital about the finance function appointment. And if the board-level search at that firm requires a specialist in regulated firm executive appointments, the team at Exec Capital is the right conversation to have alongside it.