Why Dual SMF16/17 Candidates Are Scarcer Than Firms Expect

A firm decides it needs both functions covered by one person. The logic is sound: the firm is small, the budget supports one appointment rather than two, and plenty of comparable firms run the same structure. The job goes to market as a combined Compliance Officer and MLRO role, and then very little happens. Applications arrive from people who are strong on one side and thin on the other. Six weeks in, somebody asks whether there is a shortage.

There is, in a specific sense, and it is worth understanding why — because the reason is structural rather than cyclical, and it changes what a firm should do about it. We have written elsewhere about whether one person should hold both functions at all. This piece is about the supply side: who the genuinely dual-capable population is, why it is small, and what that means for how a firm should go about the appointment.

The two functions are not adjacent skills

Firms tend to assume that compliance oversight and financial crime are neighbouring specialisms, because both sit under the compliance umbrella and both report to the same board. In career terms they are not neighbours at all.

Compliance oversight, as set out in our SMF16 compliance oversight function guide, is primarily conduct work. Its substance is the handbook: financial promotions, suitability and appropriateness, Consumer Duty outcomes, complaints, conflicts, training and competence, the monitoring programme, and the relationship with supervision. Its instincts are regulatory interpretation and systems-and-controls design.

The MLRO role, covered in our SMF17 MLRO function guide, is investigative work. Its substance is the business-wide risk assessment, customer due diligence standards, sanctions and screening, transaction monitoring, internal reports and suspicion decisions, and the law enforcement interface. Its instincts are pattern recognition, evidential judgement and a tolerance for making consequential decisions on incomplete information.

Both are serious disciplines. They share a vocabulary and a reporting line and very little else. A person who is genuinely good at one has usually spent years getting good at it, and those years were not spent on the other.

Career paths separate early, and the market rewards specialising

This is the mechanism behind the scarcity. Compliance careers fork within the first three or four years, usually at the point someone joins a function large enough to have separate teams. An analyst placed in financial crime does KYC, then enhanced due diligence, then alert review, then investigations, and ten years later is a financial crime specialist. An analyst placed in conduct does promotions review, then monitoring, then advisory, then policy, and ten years later is a conduct specialist. Our pieces on the route to SMF16 compliance oversight and the SMF17 MLRO career path describe the two routes.

Nothing in the market pulls them back together. Large firms have no dual roles to offer, because at scale the functions are separately staffed and separately led — the people who hold SMF16 and SMF17 at a bank are two different people with two different CVs. Pay progression rewards depth. Recruiters, ourselves included, index on specialism because clients ask for specialism. The result is that by the time somebody has the fifteen years of experience a dual brief typically asks for, the overwhelming probability is that those years were spent on one side of the line.

So where do the genuinely dual-capable people come from?

They exist, and they come from four fairly specific places. Knowing which is useful, because each has different characteristics and firms tend to want the one that is rarest.

Small-firm generalists. People who have spent their careers in firms of fifteen to eighty people, where there was never a separate financial crime team and the compliance person did everything. This is the largest group and often the best fit, because the experience is directly analogous. The caveat is that depth on either side varies with the firm they came from: someone from a low-risk advisory business may have genuinely limited financial crime exposure despite holding the function.

Consultancy and outsourced-provider backgrounds. Practitioners who have worked across a portfolio of client firms, frequently covering both functions. Usually very broad, very comfortable with authorisations and remediation, well practised at supervisory correspondence. Occasionally lighter on having lived with the consequences of their own decisions over several years at one firm.

Specialists who deliberately crossed over. A financial crime lead who moved into a head of compliance role at a smaller firm, or the reverse. Genuinely dual, and the smallest of the four groups, because the move usually involves a short-term pay or seniority cost that few people choose to take.

Fractional and portfolio practitioners. Experienced holders who carry several firms at once, which is increasingly where the deepest dual experience sits. Someone holding the combined function at five firms accumulates more varied exposure in two years than a single-firm appointment does in six, and sees more authorisation variations, more supervisory interaction and more remediation. This group is the reason the fractional dual SMF16/17 market has developed as quickly as it has.

What a firm is really choosing between

Once the supply picture is clear, the decision looks different. A firm with a combined brief is effectively choosing between four options, and it helps to name them.

It can hire a full-time dual holder from the small-firm generalist pool, accepting that one side will be stronger than the other and planning to supplement the weaker side. It can hire a specialist for the function that carries most of the firm’s risk and buy in the other on a fractional basis, which is a common and sensible structure. It can appoint a fractional appointment who holds both, which matches the scarcity of the skill to the size of the requirement. Or it can insist on a full-time appointment that is deep on both sides and wait, which in a thin market means waiting a long time while the functions sit uncovered or informally held.

Most firms, once they see those four stated plainly, do not choose the fourth. But it is the default outcome of a search run without this conversation, because the brief never gets revisited.

How to tell which side a candidate is really strong on

CVs for dual roles are unreliable, not through dishonesty but because the title compresses two jobs into one line. A candidate who held “Head of Compliance and MLRO” at a previous firm may have spent ninety per cent of their time on conduct and signed off a handful of internal reports a year. Four questions usually settle it quickly.

Ask how many internal reports they handled in a typical month, and what the most difficult decision was. Specific numbers and a specific case indicate real ownership; generalities indicate the function was nominal. Ask what their monitoring programme covered last year and what it found — a candidate who owned conduct will describe findings and remediation rather than a plan. Ask about their last piece of supervisory correspondence and who drafted the response. And ask what they would change first at your firm, which separates people who think in terms of control design from people who think in terms of process administration.

Our guide to FCA senior manager interviews is also worth reading before interviewing, because the FCA’s own assessment of competence for a combined function is a useful calibration for the firm’s.

The scarcity cuts the other way too

One further point, which firms rarely consider. Because dual-capable candidates are scarce, the good ones are selective — and what they select on is not primarily money. They are taking on two sets of personal regulatory responsibility at one firm, which roughly doubles their exposure, and they assess that exposure carefully.

In practice this means they will ask about the things a firm would rather not discuss first: whether the board understands what the functions require, whether there is any budget for systems and training, whether the previous holder left on good terms and why, and whether there is any open supervisory matter. A firm that answers those well is competing for scarce people on the terms they actually care about. A firm that deflects them is competing on salary alone, in a market where salary is not the binding constraint. Our guide to reasonable steps under SMCR is worth a look for the board-level view of what the appointment requires.

Where we would start

For a firm that has had a combined brief in the market for more than six weeks without a credible shortlist, the useful sequence is: establish which function carries the greater share of the firm’s actual regulatory risk, decide whether the appointment needs to be full-time or whether the requirement is genuinely a few days a month, and then search against the pool that exists rather than the one the brief describes.

That usually means a fractional or portfolio appointment for the combined function, or a full-time specialist for one side with the other covered on a retained basis. Both are well-trodden structures, both are acceptable to the regulator when properly resourced, and both are available now, which an unqualified full-time dual hire frequently is not.

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