What a Statement of Responsibilities Is For

Under the Senior Managers and Certification Regime, every Senior Manager must have a Statement of Responsibilities setting out the areas of the firm they’re responsible for. It’s submitted to the regulator with the approval application and must be kept up to date. The requirements are set out in SUP 10C of the FCA Handbook and, for dual-regulated firms, the PRA Rulebook.

The document does three jobs at once:

• It defines accountability. It tells the regulator, the board and the individual exactly who is responsible for what.
• It anchors the Duty of Responsibility. If a breach occurs in a Senior Manager’s area, the regulator will look at their Statement of Responsibilities to establish what that area was, and then ask whether they took reasonable steps to prevent the breach.
• It shapes the approval. The regulator assesses whether the candidate is fit and proper to take on the responsibilities described. A Statement that doesn’t match the candidate’s experience invites questions.

What Goes In

The Senior Manager Functions

The Statement lists the functions the individual will perform, such as SMF1 Chief Executive, SMF16 Compliance Oversight or SMF17 MLRO. The inherent responsibilities of each function come with the designation.

Prescribed Responsibilities

The regime lists Prescribed Responsibilities that firms must allocate to Senior Managers, such as responsibility for the firm’s performance of its obligations under the regime itself, or for compliance with the client assets rules where relevant. The number that apply depends on the firm’s tier: Core firms have a small set, Enhanced firms a much larger one. Each one allocated to the individual must appear in their Statement. Our guide to which SMFs apply at each firm tier explains how the tiers work.

Other Responsibilities

Most Senior Managers are also responsible for areas not covered by their function or a Prescribed Responsibility: a business line, a department, a project or a group of activities. These need to be described clearly. At Enhanced firms, the regime also requires that every business activity and management function has a Senior Manager with overall responsibility for it, so nothing falls between the gaps.

What a Good Statement Looks Like

Specific, Not Generic

“Responsible for compliance” says very little. “Responsible for the design and operation of the firm’s compliance monitoring programme, the oversight of financial promotions and the firm’s regulatory reporting to the FCA” tells the regulator, the board and the individual exactly where accountability sits. Specific wording protects the Senior Manager as well as the firm, because it makes clear what they aren’t responsible for.

Self-Contained

The Statement should make sense on its own, without needing to be read alongside job descriptions, board minutes or policies. The regulator expects to be able to understand a Senior Manager’s responsibilities from the Statement itself.

Consistent Across the Senior Team

Each Statement must fit with the others. Two Senior Managers claiming responsibility for the same area creates confusion over who is accountable. An area nobody claims is worse. Where responsibilities are genuinely shared, the Statements should say so and explain how the sharing works.

Realistic for the Individual

A Statement that allocates more than one person can realistically oversee is a problem for everyone. The regulator may question whether the individual has the time and capacity, and if something goes wrong, it will be hard for them to show they took reasonable steps across such a broad area.

Common Mistakes

• Copying from templates. Generic wording rarely fits the firm’s real structure, and the regulator can tell.
• Drafting it last. Writing the Statement after the candidate has accepted means the search was run against a job title rather than the actual accountability. We start every search from the Statement of Responsibilities for exactly this reason.
• Overlaps and gaps. Statements drafted individually, without being checked against each other, often double-count some areas and miss others entirely.
• Letting it go stale. Firms change: new products, restructures, departures. A Statement that described the role accurately two years ago may not describe it now.
• Loading the chief executive. At smaller firms, everything not obviously allocated tends to default to the chief executive. That can leave one person with an unrealistic set of responsibilities.

Keeping Statements Up to Date

When a Senior Manager’s responsibilities change significantly, the firm must submit a revised Statement of Responsibilities to the regulator. Common triggers include:

• a Senior Manager leaving, with their responsibilities reallocated to others
• a new product line, business area or permission
• a restructure or change in reporting lines
• the firm moving from Core to Enhanced status, bringing new Prescribed Responsibilities
• an acquisition or integration.

It’s good practice to review every Statement at least annually, and whenever the board approves a material change to the business. Our article on what to do when a Senior Manager resigns covers reallocation after a departure.

Statements of Responsibilities and Recruitment

The Statement of Responsibilities should be the starting point for any Senior Manager search, not the last step. It tells you what the role actually requires, which in turn tells you what experience to look for and what the regulator will expect to see. A candidate who’s excellent on paper but has never covered part of the responsibilities in the Statement will need to show how they’ll close that gap, and the firm will need to explain it in the application.

For finance roles, this is particularly important. A finance director holding SMF2 at an Enhanced firm, or an executive director with finance responsibilities at a Core firm, may carry responsibilities for prudential reporting, capital and liquidity as well as the finance function itself. Our sister practice FD Capital specialises in finance leadership appointments and builds these regulatory responsibilities into its CFO and finance director searches.

For Candidates: Read It Before You Sign

If you’re offered a Senior Manager role, ask for the draft Statement of Responsibilities before you accept. Check that:

• the responsibilities are clear and match what you’ve been told about the role
• you have the experience to cover each area, or a plan to close any gaps
• the scope is realistic for the time and resources you’ll have
• it doesn’t overlap with or leave gaps alongside other Senior Managers’ Statements
• you know what you’re inheriting in each area, including open issues.

Our article on preparing for your first Senior Manager role covers the other questions worth asking.

The Bottom Line

A well-written Statement of Responsibilities makes accountability clear, protects the individual and the firm, and makes the approval application stronger. It takes more effort to draft properly than a template, but far less than untangling an unclear one after something has gone wrong. If you’re not sure your firm’s Statements fit together, a governance and SMF structure review is a quick way to find out.