Fractional Compliance Officer Recruitment

Fractional Compliance Officer Recruitment — senior Heads of Compliance and MLROs, SMF16 and SMF17, one to three days a week

Every FCA-regulated firm needs credible compliance leadership. Not every firm needs it five days a week. A small IFA, a boutique investment manager, an early-stage lender or payments firm, or a business that has just been authorised can often get everything it needs from an experienced Head of Compliance or Money Laundering Reporting Officer working one, two or three days a week, at a fraction of the cost of a full-time hire.

FD Capital recruits fractional compliance leaders for regulated firms across the UK: fractional Heads of Compliance holding the SMF16 Compliance Oversight function, fractional MLROs holding SMF17, and combined fractional SMF16/17 holders. They are senior individuals, most of whom have held approved roles at several firms, engaged directly by your business on a part-time basis. Fractional compliance is a natural extension of the fractional CFO and fractional FD model that FD Capital has been placing since 2018, and every search is led personally by Adrian Lawrence FCA.

If you need fractional cover quickly, call 020 3287 9501 or use our contact page. For fractional and interim roles we aim to put a shortlist in front of you within 48 to 72 hours.

Fractional, outsourced or interim: what is the difference?

The three terms are often used interchangeably, but they describe different arrangements, and the difference matters to the FCA.

The key point is that an SMF is held by an individual, not a firm. Whichever model you choose, the person holding SMF16 or SMF17 carries personal accountability under the Senior Managers and Certification Regime, including the duty of responsibility and the Senior Manager Conduct Rules. A fractional arrangement makes that relationship direct: you know exactly who holds the function, how much time they give you and how to reach them. Our article on outsourcing the MLRO function looks at where outsourced models work and where they come under strain.

Can a fractional compliance officer hold SMF16 or SMF17?

Yes. There is no rule requiring an SMF16 or SMF17 holder to be full-time, and fractional and part-time holders are common at smaller Core firms. The FCA will, however, want to be satisfied on three points when it assesses the application and supervises the firm.

• Time commitment. The individual must have enough time to discharge the function properly for your firm’s size, complexity and risk. The FCA’s fit and proper assessment includes competence and capability, and a candidate holding several roles may be asked how they divide their time.
• Availability. Regulatory issues and suspicious activity do not keep office hours. The arrangement should set out how the individual can be reached between scheduled days and who acts when they cannot.
• Support. A fractional Head of Compliance needs someone in the business to carry day-to-day compliance tasks, and a fractional MLRO needs a deputy or alternate so that internal reports can be received and assessed at any time. Our AMLRO recruitment page covers that role.

The FCA Handbook requires firms to maintain an adequate, independent compliance function, applied proportionately to the nature, scale and complexity of the business. For many smaller firms, a well-structured fractional arrangement is exactly that proportionate answer. Payment institutions and e-money institutions are a special case: they sit outside SM&CR, but still need a Head of Compliance and a nominated officer under the Money Laundering Regulations 2017, and fractional arrangements work there on the same principles. See our payments compliance recruitment page.

Which firms suit a fractional Head of Compliance or MLRO?

Small IFAs and wealth managers. Directly authorised advice firms and small wealth managers often need a senior SMF16, frequently combined with SMF17, for one or two days a week. See our wealth management compliance recruitment page.

Boutique investment and asset managers. Firms with a small number of clients or funds, where the compliance workload is real but steady.

Newly authorised firms. Businesses that have just come through authorisation and need a credible senior manager while volumes build. Our guide to SMF appointments during FCA authorisation explains how the appointments fit into the application.

Early-stage lenders and BNPL providers. Lenders with modest volumes, before the business scale justifies a full-time Head of Compliance. As volumes grow, the FCA will expect more. See our consumer credit compliance recruitment page.

Early-stage payments and e-money firms. Small EMIs, payment institutions and open banking providers that need a senior MLRO and Head of Compliance but have limited transaction volumes.

Firms between permanent hires. When a full-time SMF16 or SMF17 leaves, a fractional holder can provide senior cover while a permanent search runs, or become the long-term answer. Our page on SMF16 and SMF17 temporary cover under the 12-week rule explains the timetable.

Fractional arrangements are less suitable for high-volume consumer lenders, large payments firms, firms with significant suspicious activity reporting volumes, and Enhanced SM&CR firms. Those businesses usually need a full-time compliance leader with a team.

How many days a week do you need?

The right time commitment depends on your permissions, client numbers, products, financial crime exposure and the strength of the team beneath the senior manager. The table below is a starting point.

Most firms start at the lower end and build up. The arrangement should be reviewed at least annually, and whenever the business adds permissions, products or significant volume.

What a fractional Head of Compliance or MLRO does

A good fractional compliance leader does the senior work and makes sure the rest gets done. In a typical engagement they will:

• own the compliance monitoring plan and carry out or oversee the testing
• report to the board on compliance risk, breaches and regulatory change
• manage the firm’s relationship and correspondence with the FCA
• approve financial promotions or oversee the approval process
• lead the Consumer Duty evidence and the annual board assessment
• as MLRO, own the firm-wide risk assessment, receive internal suspicious activity reports and decide on external reporting
• produce the MLRO’s annual report to the board
• design and deliver compliance and financial crime training
• advise on new products, partners and business lines

For the full scope of each function, see our guides to SMF16, SMF17 and the MLRO role. Whether one person should hold both functions is a decision in its own right; our article SMF16 and SMF17: one person or two? sets out the trade-offs.

What a strong fractional compliance candidate looks like

Prior SMF experience. Most strong fractional candidates have held SMF16, SMF17 or both at more than one firm. That matters to the FCA and shortens the learning curve.

Sector match. A fractional MLRO for a payments firm needs payments experience; a fractional Head of Compliance for an IFA needs advice and suitability experience. Generalist fractional candidates rarely work as well.

A manageable portfolio. Many fractional compliance leaders work for two to four firms. That breadth is valuable, but you should understand their other commitments, any conflicts of interest and how they will prioritise your firm when several clients need them at once.

Efficiency. On limited days, the best fractional compliance leaders prioritise ruthlessly, build systems the business can run between visits, and know when to escalate.

Board presence. A fractional SMF16 must be able to challenge the CEO and board with authority, even though they are not in the building every day.

Indicative cost

Fractional compliance leaders are usually engaged on a day rate, sometimes structured as a monthly retainer. The ranges below are indicative of the London and South East market; regional rates are often lower.

A full-time Head of Compliance at a comparable firm will often cost well over £100,000 a year once salary, bonus, pension and employer’s National Insurance are included. For full-time benchmarks, see our compliance salary guide and MLRO salary guide.

How FD Capital runs a fractional compliance search

1. Brief. We establish your permissions, SM&CR category, products, volumes, financial crime exposure and the support available in the business, and agree the time commitment the role genuinely needs.
2. Shortlist in 48 to 72 hours. We draw on a network of senior compliance professionals who have held SMF16 and SMF17 approvals, and check their history on the FCA Financial Services Register.
3. Interviews and references. We help you assess sector fit, capacity and other commitments, and raise reference issues early.
4. Approval. We support the candidate and your firm through the Form A process and possible FCA interview. Our guide to how long SMF approval takes helps with planning.
5. Review. We check in as the engagement settles and help you scale the arrangement up, or move to a permanent hire, as the business grows.

Where you need a full-time hire instead, our compliance recruitment, MLRO recruitment and SM&CR compliance recruitment teams can help. If the role is a C-suite Chief Compliance Officer, our sister firm Exec Capital also places fractional CCOs.

Frequently asked questions

Can a fractional compliance officer be our SMF16?

Yes, provided the individual has the time, experience and support to discharge the function for a firm of your size and risk, and the FCA approves them. Fractional SMF16 holders are common at smaller Core firms.

Can one fractional person hold SMF16 and SMF17 for us?

Yes, and at small firms that is often the most efficient arrangement. Make sure there is a deputy or alternate MLRO so suspicious activity reporting continues when they are not working for you.

How is a fractional compliance officer different from a compliance consultancy?

A fractional compliance officer is a named individual embedded in your firm, holding the SMF personally and working a set number of days. A consultancy provides services from a team, which can be useful for projects and monitoring but may not give you the same continuity of senior accountability.

How quickly can a fractional Head of Compliance start?

We aim to provide a shortlist within 48 to 72 hours of a full brief. Many fractional candidates can start within one to two weeks, subject to FCA approval where a new SMF is needed. The 12-week rule may allow them to cover an unforeseen vacancy while the application is made.

Does the FCA limit how many firms a fractional SMF can work for?

There is no fixed limit, but the FCA will consider whether the individual has enough time for each role and how they manage conflicts. Expect questions if a candidate holds many approvals.

When should we move from fractional to full-time?

Common triggers are rising volumes, new permissions, regulatory scrutiny, growth towards the Enhanced threshold, or a fractional holder consistently working beyond their agreed days. Our article on when to hire your first in-house Head of Compliance covers the signs.