FCA Gateway: What a Strong CEO and Chair Statement Needs

The CEO and Chair Statements are the FCA’s window into whether the firm’s leadership genuinely understands its regulatory obligations — or whether it is relying on a compliance function and legal advisers to navigate a process the senior management have not engaged with themselves.

As part of the FCA authorisation process and the gateway assessment for certain regulated activities, the CEO (SMF1) and Chair (SMF9) of the applicant firm are required to provide statements that describe their understanding of the firm’s business, its regulatory obligations, its governance framework and their personal accountability under the SMCR. These statements are assessed by the FCA as evidence of leadership competence and regulatory understanding — not as a formality to be signed off at the end of the application process.

What the FCA Is Assessing

The FCA uses the CEO and Chair Statements to assess three things: whether the individual understands the regulatory framework applicable to the firm’s proposed activities; whether they understand their personal accountability under SMCR and what the Statement of Responsibilities means in practice; and whether the firm’s governance arrangements — as described by the CEO and Chair — are credible and proportionate to the firm’s activities and risk profile.

A statement that reads as if it has been drafted by a solicitor or compliance consultant and signed without genuine engagement from the individual will typically generate FCA queries — or, in the worst case, an invitation to an FCA interview to assess whether the signatory actually understands the content. The FCA’s interviewers are experienced at identifying the difference between a statement drafted by the individual and one drafted on their behalf.

The CEO Statement: Structure and Content

Business and strategy. The CEO statement should open with a concise description of the firm’s proposed business — what it does, who its clients are, and what regulated activities it will carry on. This should be specific to the firm, not a restatement of the generic regulatory business plan. The CEO’s description of the business should reflect their direct involvement in defining the strategy and their understanding of how the firm will compete and generate revenue in its chosen market.

Regulatory framework. The CEO must demonstrate that they understand which regulatory framework applies to each aspect of the firm’s proposed activities — which FCA rules govern the client-facing activities, what the capital requirements are and why, and how the firm’s compliance arrangements are designed to address those requirements. This section should be specific to the firm’s actual permission rather than a generic description of FCA regulation. A CEO who can articulate why the firm’s specific business model requires specific compliance controls has demonstrated a level of engagement that the FCA will find reassuring.

Personal accountability. The CEO’s statement must address their understanding of their SMCR obligations — the functions they will hold, the responsibilities allocated to them in their Statement of Responsibilities, and what “reasonable steps” will look like in practice in their role. This should go beyond a description of the SMF1 function to describe how the CEO will actually discharge their oversight responsibilities: what MI they will receive, what decisions they will take, how they will interact with the compliance and risk functions.

Risk and governance. The statement should address the firm’s key risks — the risks inherent in its business model, client base and regulatory activities — and describe how the governance framework is designed to identify, manage and escalate those risks. The CEO should be able to describe the firm’s governance structure in their own terms, not in the formal language of the regulatory business plan. A CEO who can explain why the firm’s committee structure is designed the way it is has demonstrated genuine ownership of the governance framework.

The Chair Statement: A Different Focus

The Chair’s statement covers different ground from the CEO’s. The FCA expects the Chair to demonstrate their understanding of their role as an independent oversight function — how they will challenge the executive, how the board will be constituted and governed, and how they will ensure that the firm’s governance framework operates effectively in practice rather than just on paper.

Independence and challenge. The Chair must be able to articulate what genuine independence looks like in the context of this specific firm. For a new or small firm where the Chair may know the executive team personally or have been involved in founding the business, the question of independence is particularly important. The FCA will look for evidence that the Chair understands the potential conflicts and has a credible approach to managing them.

Board constitution and effectiveness. The statement should describe how the board is constituted, what the relevant skills and experience of board members are, and how the Chair will ensure that the board operates as an effective governance body rather than as a rubber stamp for executive decisions. The FCA expects the Chair to describe the processes for board evaluation, skills assessment and succession planning — even for early-stage firms.

SMF9 accountability. The Chair holds SMF9 — the Chair of the Governing Body function — and must demonstrate their understanding of what that accountability means. The Chair’s statement should describe how they will discharge their reasonable steps obligations as SMF9: what information they will receive, what their role is in relation to the SMF1 CEO, and how they will manage situations where they have concerns about executive conduct or governance failures.

Common Weaknesses the FCA Identifies

Generic language is the most consistent weakness. A statement that describes the firm’s governance framework in terms that could apply to any regulated firm — “the board will meet quarterly to review performance against strategic objectives and ensure regulatory compliance” — tells the FCA nothing about this specific firm. The statement should be specific enough that the FCA can tell it was written for this application, not repurposed from a template.

Regulatory framework descriptions that are too high-level or inaccurate. CEOs and Chairs who describe their regulatory obligations in terms that do not match the firm’s actual permission — or who confuse the regulatory requirements applicable to different types of firm — signal that the individual has not engaged closely with the regulatory framework. The FCA will query or escalate any statement that suggests a material misunderstanding of the applicable rules.

SMCR accountability described in passive terms. A CEO who describes their SMCR accountability as “overseeing the compliance function” or “taking responsibility for regulatory compliance generally” has not described the active, specific oversight obligation the SMCR creates. The statement should describe what the CEO will do — not what the compliance function will do on the CEO’s behalf.

Tone and Length

The statements should be in the first person, written in the individual’s own voice, and should reflect genuine engagement rather than technical drafting. They do not need to be long — a focused two to three pages for a CEO and one to two pages for a Chair is typically sufficient for a non-bank regulated firm. Length does not substitute for specificity: a concise statement that addresses each of the FCA’s assessment criteria specifically is significantly more effective than a lengthy one that covers each in general terms.

Key References

• FCA — Authorisation application guidance
• FCA Handbook FIT — fit and proper requirements