Why SMF Offers Are Different

An offer to a Senior Manager has three features most senior offers don’t. The candidate can’t start in the function until the regulator approves them. They often have unvested deferred pay that will lapse when they resign. And they may be subject to malus and clawback at their current firm, which can follow them after they leave. Each needs to be dealt with in the offer, not after it.

Make the Offer Conditional, Clearly

Most SMF offers are conditional. Typical conditions include:

• regulatory approval for the Senior Manager Function
• satisfactory regulatory references covering the previous six years
• a satisfactory criminal records check and credit check
• verification of qualifications
• any other checks the firm requires.

Be clear about what happens if a condition isn’t met. In particular, think through what happens if approval is delayed or refused after the candidate has resigned. Some firms agree in advance that the candidate will join in a non-SMF role while approval is pending, or will be paid for a period if approval is refused for reasons outside their control. Take employment law advice on the wording.

Plan the Notice Period and Approval Together

The aim is to run the notice period and the approval in parallel, so the candidate is approved by the time they’re free to start. Firms that wait until the candidate joins before submitting the application often have a new Senior Manager on the payroll who can’t yet perform the function. Our SMF appointment timeline sets out the stages in detail.

Garden leave is common for Senior Managers moving between competitors. Agree with the candidate how it will be handled and whether the current employer might release them early.

Buy-Outs

Senior Managers at larger firms often have unvested deferred bonuses or share awards that lapse on resignation. To make the move possible, the hiring firm may offer to replace them: a buy-out. Before agreeing one:

Where the Remuneration Codes in the FCA’s SYSC sourcebook apply, a buy-out often can’t simply be paid in cash on joining. It may need to be deferred and remain subject to performance adjustment, in line with the awards it replaces.

Malus and Clawback From the Previous Employer

Candidates may remain subject to malus or clawback at their previous firm after they leave, typically if misconduct or serious failings later come to light from their time there. Bought-out awards may also be subject to adjustment for conduct at the previous firm. A candidate’s regulatory reference may disclose relevant information. Ask the candidate openly whether they’re aware of anything that could trigger adjustment, and take it into account when structuring the offer.

Fractional and Interim Offers

Fractional and interim Senior Managers are usually engaged through their own company on a day rate rather than employed, so buy-outs rarely arise. The terms still need care: the number of days, notice on both sides, what happens if approval is delayed, and how the engagement terms align with the Statement of Responsibilities. Check that the firm’s D&O insurance covers the individual as an insured person.

Restrictive Covenants

Many Senior Managers have non-compete, non-solicitation and non-dealing clauses in their current contracts. Review them before the offer, particularly for client-facing roles, and take legal advice where they could restrict what the candidate can do in their new role or when they can start.

The Package Itself

Benchmark the package against the external market for approved Senior Managers, not against your internal grades. Our SMF and compliance salary guide sets out current ranges. For control functions such as compliance, MLRO and risk, make sure variable pay isn’t tied to the performance of the business areas they oversee, because that undermines their independence. And if you’re offering a first-time Senior Manager role, remember that the step up usually comes with a meaningful increase.

Common Mistakes at the Offer Stage

• Discovering deferred awards after the offer rather than discussing them at first interview.
• Unconditional offers that don’t allow for approval or references.
• Waiting for the candidate to join before submitting the approval application.
• Ignoring garden leave and restrictive covenants until after resignation.
• Benchmarking against internal grades rather than the market for approved Senior Managers.
• No plan for refused or delayed approval, leaving both sides exposed.

Timing the Conversation

The best time to talk about deferred pay, notice periods and covenants is early, ideally at first interview. Candidates expect the question and generally prefer it. It also gives the firm time to plan the budget and avoids an offer that unravels late. We cover these points with every candidate before introduction, so clients know the likely cost and timetable before they make an offer.

For Candidates

If you’re considering a Senior Manager offer, get a schedule of your own unvested awards from your current employer’s HR or remuneration team, read your contract’s notice and covenant clauses, and ask the hiring firm how they’ll handle approval if it takes longer than expected. A good offer deals with all three.

Frequently Asked Questions

Can a new Senior Manager start before they’re approved?

They can join the firm, but they can’t perform the Senior Manager Function until approved. Some firms bring them in earlier in a non-SMF capacity.

Do we have to buy out deferred awards?

No, but strong candidates at larger firms often won’t move without it. Discuss it early so it’s built into the budget.

What if approval is refused after the candidate has resigned?

This is rare where candidates have been properly checked, but the offer should say what happens. Take employment law advice on the wording.