Building a Board Career: NED Roles in FCA-Regulated Firms

A non-executive career in financial services is a different proposition from a NED role in an unregulated business. Board positions at FCA-regulated firms carry regulatory approval, personal accountability and a level of scrutiny that many first-time candidates underestimate. This article sets out how to build toward one: which board roles are controlled functions, what firms and the regulator look for, and how to position yourself.

Which board roles are regulated

The first thing to understand is that several board positions at regulated firms are senior management functions requiring FCA pre-approval, not simply appointments the board can make at will. The main ones are the Chair (SMF9), the Chair of the Risk Committee (SMF10), the Chair of the Audit Committee (SMF11), the Chair of the Remuneration Committee (SMF12), the Chair of the Nomination Committee (SMF13), and the Senior Independent Director (SMF14).

Holding one of these means a Statement of Responsibilities, the Duty of Responsibility, and Conduct Rules accountability — the same framework that applies to executive senior managers. A regulated-firm chairmanship is materially different from a corporate chairmanship: the Statement of Responsibilities includes prescribed responsibilities for the firm’s overall regulatory compliance and its relationship with the FCA itself.

What firms look for in a regulated NED

Boards recruiting non-executives for regulated firms weigh a combination that is narrower than the general NED market:

• Regulatory fluency — understanding the firm’s obligations well enough to challenge management credibly on them.
• Relevant sector experience — financial services background, or deep expertise the board specifically lacks.
• Committee-ready specialism — audit, risk or remuneration depth that maps to a committee the board needs chaired.
• Independence of mind — the willingness to challenge, which the regulator expects non-executives to exercise genuinely.
• Fitness and propriety — a clean record that will withstand the FCA approval process.

The audit and risk committee route

For finance professionals, the most common entry point is the Audit Committee, and for risk professionals the Risk Committee. Both value the technical depth that a career in finance or risk provides, and both are committees where a first-time NED can add immediate, demonstrable value. A qualified accountant — particularly an ICAEW member with listed-company or regulated-firm experience — is a natural Audit Committee candidate, and Audit Committee membership is often the stepping stone to chairing it, which is itself a controlled function.

Building the profile

The practical route is consistent. Build executive credibility first — most regulated NEDs come from senior executive careers, and boards want people who have actually run something. Develop a specialism the board needs, rather than presenting as a generalist. Get governance exposure before you seek a board seat: committee attendance, advisory roles, or a trustee position at a charity or similar body all build the vocabulary and the evidence. And understand the regulatory framework properly, because a candidate who cannot discuss SM&CR, the firm’s permissions and its principal risks will not be credible.

Be patient about the first appointment. Regulated NED roles are competitive and the approval process is slow; candidates who treat it as a multi-year build rather than a job search do better.

What the role actually demands

It is worth being clear-eyed about the commitment. A regulated-firm NED is expected to prepare properly for board and committee meetings, to understand the business well enough to challenge, and to be available when issues arise. The time commitment is greater than many first-time NEDs anticipate, and the personal accountability is real — a non-executive who fails to exercise reasonable steps in their area of responsibility can be held individually responsible.

For candidates, that is the trade: genuine influence and a valuable portfolio position, in exchange for genuine responsibility and scrutiny.

The approval process, and why it takes time

A regulated NED appointment is not complete when the board offers it. The candidate must be approved by the FCA before taking up the role, which means a formal application, a Statement of Responsibilities where relevant, and the firm’s own fitness and propriety assessment evidenced to the regulator. The process takes months rather than weeks, and the regulator can and does ask questions.

For candidates this has two implications. First, plan on a long runway between expression of interest and appointment. Second, expect scrutiny of your full record — regulatory history, directorships, financial soundness and anything that bears on integrity. Candidates with complications in their history are better addressing them openly early than having them surface during approval.

Portfolio building and time commitment

Most non-executives build a portfolio of two to four roles rather than relying on one. For regulated-firm NEDs, that portfolio needs managing carefully: each role carries real preparation time, and the regulator expects non-executives to devote sufficient time to discharge their responsibilities. Over-committing is a genuine risk, and boards increasingly ask candidates to account for their other commitments.

A realistic first portfolio for someone leaving executive life might be one regulated NED role alongside one or two unregulated or not-for-profit positions — building governance experience across contexts while keeping the regulated commitment manageable.

What differentiates a strong candidate

Boards see many capable executives who want a NED seat. What separates the ones who get appointed is usually specificity: a clear proposition about what they bring that this board currently lacks. ‘Experienced CFO seeking board roles’ is not a proposition. ‘Regulated-firm CFO with prudential capital experience and audit committee readiness, in a sector this board is entering’ is. The candidates who articulate that, and can evidence it, move fastest.

How the search works

Regulated NED appointments are usually run through specialist search rather than advertised, because boards want candidates whose fitness and propriety will withstand approval and whose expertise maps precisely to a committee need. Within our group, board and non-executive appointments are led by our colleagues at NED Capital, whose entire practice is built around board-level search — while FD Capital focuses on the executive finance, risk and compliance functions.

For finance and risk leaders considering the move into non-executive work, the two often connect: an executive career in a regulated firm is the strongest foundation for a regulated board seat.

Committees: where the work actually happens

Much of a non-executive’s contribution at a regulated firm happens in committee rather than in the main board meeting. Audit committees examine the integrity of financial reporting and the work of internal and external audit; risk committees interrogate the risk framework and appetite; remuneration committees consider whether pay structures encourage the right behaviour, which the regulator treats as a conduct matter. Nomination committees own board composition and succession.

Candidates should understand which committee their expertise best serves and prepare for it specifically. A finance leader targeting an audit committee should be fluent in the current audit and reporting issues facing regulated firms; a risk professional targeting a risk committee should be able to challenge a risk appetite statement credibly. Generic board readiness is much less compelling than committee-specific depth.

The transition from executive to non-executive

The hardest adjustment for many first-time NEDs is the change of role rather than the change of subject. A non-executive does not run anything. The contribution is challenge, oversight and judgement — asking the question that exposes an assumption, not fixing the problem yourself. Executives who cannot make that shift are quickly identified by boards as difficult colleagues who stray into management.

Candidates who have consciously practised the non-executive posture — in a charity board, an advisory role, or a committee — adapt considerably faster, which is part of why those roles are such useful preparation.

Remuneration and what to expect

Non-executive fees at regulated firms vary widely with the size and complexity of the firm and the committee load carried. A committee chairmanship attracts more than membership, and the Chair of the Board more again. Candidates moving from executive roles should be realistic: a NED portfolio rarely replaces an executive income immediately, and the early roles are often taken as much for the experience and the platform they create as for the fee.

What matters more than the individual fee is the trajectory. A first regulated NED role, discharged well, makes the second considerably easier to secure — and a portfolio built deliberately over several years can become both financially worthwhile and genuinely interesting work.

Common mistakes first-time candidates make

• Approaching the search as a job hunt rather than a multi-year positioning exercise.
• Presenting as a generalist rather than offering a specific, evidenced committee capability.
• Underestimating the preparation time and the personal accountability the role carries.
• Neglecting to build governance experience before seeking a paid regulated seat.
• Failing to address anything in their regulatory or professional record that approval will surface.

This article is general information about UK financial services regulation and recruitment practice. It is not legal or regulatory advice. Firms and individuals should take their own professional advice on their specific circumstances.

Adrian Lawrence

Adrian Lawrence FCA is the founder of FD Capital and a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW). He holds a BSc from Queen Mary College, University of London, and has over 25 years of experience as a Chartered Accountant and finance leader working with private, PE-backed and owner-managed businesses across the UK. He founded FD Capital to connect growing businesses with the Finance Directors and CFOs they need to scale — and personally interviews candidates for senior finance appointments.