SMF16 is the hardest senior management function for most FCA-regulated firms to fill well. The pool of genuinely credible Compliance Oversight candidates is small, the good ones are usually engaged already, and the cost of appointing someone who looks right on paper but cannot handle a supervisory conversation is paid later, usually at the worst possible moment.
FD Capital recruits SMF16 holders on a permanent, part-time, fractional and interim basis for firms across payments, consumer credit, wealth management, insurance distribution and cryptoassets. If you want to understand the function itself before thinking about hiring, our SMF16 Compliance Oversight guide covers the regulatory detail. This page is about finding the person.
What we are actually recruiting for
The Compliance Oversight function carries responsibility for the firm’s compliance function and its compliance monitoring programme. In practice the holder owns the relationship with the regulator, signs off the monitoring plan, reports to the board on where the firm is not meeting its obligations, and is the person the FCA will want to speak to.
Where the firm also needs the money laundering function filled, see SMF17 recruitment.
That is a judgement role rather than a technical one. Most candidates can describe SYSC 6; far fewer can tell you about a time they stopped the business doing something profitable, and what happened next. The second question is the one that predicts whether an appointment works.
Permanent, fractional or interim
Most firms we speak to assume they need a full-time Head of Compliance and a meaningful proportion do not. The decision turns on transaction volume, product complexity and where the firm sits with the regulator, not on headcount ambition.
Permanent makes sense once the compliance workload genuinely fills a role and the firm needs someone embedded in the business day to day. Below that threshold a full-time hire tends to be underemployed, expensive and, in our experience, prone to leaving within two years.
Fractional suits firms where the work is real but intermittent: a monitoring programme to run, board reporting to produce, staff to train, questions to field. Two or three days a month buys a far more experienced person than the same budget spent on a junior full-timer. We cover this route in detail on our fractional compliance officer page, and where the firm also needs the MLRO function, in fractional dual SMF16 and SMF17 recruitment.
Interim is for gaps: a resignation, a parental leave, a remediation programme that needs capacity the permanent team does not have. If your SMF16 has just left, the twelve-week rule applies and the clock is already running. Our page on temporary cover and the 12-week rule sets out what to do in the first fortnight.
What an SMF16 costs
Compensation is the question we are asked first and the one most firms have the least reliable information about, because published ranges rarely distinguish between a Compliance Oversight holder at a small directly authorised broker and one at an Enhanced firm.
Broadly, permanent Heads of Compliance at smaller FCA-regulated firms sit well below their counterparts at Enhanced firms, where the role is larger, the scrutiny heavier and the package reflects both. Fractional holders are engaged on a day rate, and the sensible comparison is not against a full-time salary but against the cost of the alternative: a cheaper, less experienced permanent hire who needs supervision the firm cannot provide.
Our compliance salary guide carries current benchmarks by role and firm type, and we keep it updated rather than dating it to a particular year. If you want a view on a specific role, call us — a ten-minute conversation about your firm will give you a more useful number than any published range.
What good looks like
The candidates who succeed in SMF16 appointments tend to share four things. They have held the function before at a firm of comparable size and regulatory profile. They have been through at least one substantive FCA interaction and can discuss it in detail. They can explain the reasoning behind a decision rather than citing a rule. And they have the standing to disagree with a founder.
Qualifications matter and most strong candidates hold an ICA or CISI qualification, but they are a floor rather than a differentiator. The fit and proper assessment is non-negotiable and we check it early rather than discovering a problem at Form A stage.
We also ask about capacity, particularly for fractional candidates. Someone holding senior management functions at a long list of firms is not giving any of them proper attention, and the FCA has shown increasing interest in exactly that. We would rather raise it during the search than have you find out afterwards.
Approval and timing
SMF16 is a pre-approval function. The individual cannot start until the FCA has approved them, which means a Form A through Connect, a Statement of Responsibilities and supporting evidence. Firms consistently underestimate how long this takes; our guide on how long FCA SMF approval takes explains what drives the variance.
Where the appointment forms part of an authorisation application rather than a change at an authorised firm, the two processes interact in ways worth understanding in advance — see SMF appointments during FCA authorisation. Candidates increasingly face an FCA interview, and we prepare ours using the material in our guide to FCA SMF interviews.
Sectors
Payments and e-money firms make up the largest part of our SMF16 work, followed by consumer credit, wealth and investment management, insurance distribution and cryptoasset businesses. Cryptoasset firms carry particular complications around registration and banking relationships, covered separately in SMF16 and SMF17 for cryptoasset firms.
Where the requirement sits alongside or above SMF16, we recruit chief compliance officers, MLROs under SMF17 and SMF2 regulated CFOs, and handle broader hiring through our compliance recruitment practice.
How we run an SMF16 search
We start with what the firm actually does rather than a job specification, because the brief that arrives is often not the brief that is needed. We work our own network rather than advertising, since the strongest SMF16 candidates are engaged and not reading job boards. On fractional and interim mandates we aim to have a shortlist with you within 72 hours; permanent searches take longer and should.
Every candidate is referenced on judgement and capacity, not only competence, and we will tell you where someone is a stretch rather than presenting a shortlist of equals when they are not.
Why SMF16 searches go wrong
The appointments that fail tend to fail for the same handful of reasons, and none of them are about technical knowledge.
The most common is seniority. A firm hires at the level it can comfortably afford, the appointee is competent but junior, and eighteen months later the business has grown into a regulatory profile the person was never equipped for. Compliance Oversight is one of the few roles where under-hiring is more expensive than over-hiring, because the cost lands as a remediation programme rather than a salary line.
The second is independence. Where the SMF16 reports to the person whose commercial decisions they are meant to challenge, the function is structurally compromised however good the individual is. We will raise this if the structure you describe has that problem in it.
The third is capacity that was never realistic. A firm agrees two days a month, the actual workload needs four, and the holder either absorbs it unpaid until they resign or quietly does less than the monitoring programme requires. Neither ends well. We would rather have an uncomfortable conversation about days at the outset than place someone into an arrangement designed to fail.
What the FCA expects of the holder
Under the Senior Managers and Certification Regime, the SMF16 holder is personally accountable for the areas set out in their Statement of Responsibilities. That accountability is individual and it does not transfer to the firm.
In practice it means the holder must be able to evidence that they took reasonable steps. Good candidates understand this and will ask you searching questions during the process about reporting lines, budget, access to the board and what happens when they raise something unwelcome. A candidate who asks none of these has either not thought about the exposure or does not intend to use the authority. Our note on what senior managers actually risk is worth sharing with candidates early.
Frequently asked questions
Does an SMF16 have to be full-time?
No. A great many SMF16 holders at smaller firms work part-time or on a fractional basis, and the FCA accepts this where it is proportionate to the firm’s size and complexity. What matters is that the work is genuinely done.
Can the same person hold SMF16 and SMF17?
Yes, and at smaller firms it is common. We cover the combined appointment, including when it stops being appropriate, on our dual SMF16 and SMF17 page.
How quickly can you find an SMF16?
We generally have a shortlist within 72 hours for fractional and interim appointments. The binding constraint afterwards is FCA approval rather than candidate availability, which is why a firm facing a resignation should start immediately rather than waiting out the notice period.
What does an SMF16 earn?
It varies substantially by firm size and regulatory category. Our compliance salary guide carries current benchmarks, and we are happy to give you a view on a specific role.
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About the author
Adrian Lawrence FCA
Adrian is the founder and Managing Director of FD Capital. A Chartered Accountant and ICAEW Fellow, he became a finance director at 28 and has spent more than 25 years at C-suite level, including as finance director of a listed company and of a private equity backed management buy-out. Every search is run by our specialist team, with Adrian overseeing each mandate.
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