The Chair-CEO Chemistry Problem in SMF Appointments

We’ve written at length on this site about what SMF9 and SMF1 individually require — the fit and proper test, the Statement of Responsibilities, the behavioural independence the PRA expects of a chair. What we haven’t covered is the relationship between the two roles, which is, in practice, the single factor most likely to determine whether either appointment actually succeeds. A technically excellent chair and a technically excellent CEO can still produce a dysfunctional board if the two of them were never assessed against each other before either was hired.

Why This Relationship Carries So Much Weight

The SMF9 chair and SMF1 chief executive sit at the top of a regulated firm’s entire governance structure, and the SMCR’s accountability framework depends on each genuinely checking the other. A chair who defers to the CEO isn’t fulfilling the independence the PRA expects. A CEO who treats the chair as a formality isn’t giving the board the substantive engagement good governance requires. Where this relationship works, the whole governance structure beneath it tends to function properly — challenge happens, escalation happens, problems surface early. Where it doesn’t work, no amount of individual competence in either role fully compensates.

Where Searches Typically Go Wrong

Exec Capital’s own guide to recruiting an SMF1 chief executive at an FCA-authorised firm names this directly as one of the most common mistakes boards make: under-investing in the chair-CEO chemistry assessment. Searches that focus entirely on candidate capability — track record, technical fluency, regulatory experience — and skip the chemistry dimension regularly produce appointments that look right on paper and don’t work in practice. The same risk runs in the other direction: a board appointing a new chair without genuinely testing how that individual will actually work with an existing CEO is taking the identical gamble from the other seat.

The practical failure mode isn’t usually dramatic. It’s slow erosion — a chair and CEO who are both individually strong but never quite build the working trust that lets genuine challenge happen, so board meetings stay comfortable and problems get raised later than they should. By the time it’s visible to the wider board or to the regulator, the pattern has often been running for a year or more.

What Assessing the Relationship Actually Looks Like

This isn’t simply a “do they get on” conversation at the final interview stage. A properly run assessment covers how the candidate has actually operated in a comparable chair-CEO or CEO-chair pairing before — not whether they can describe good governance in the abstract, but whether they’ve done it, including through a period of genuine disagreement. It covers working style compatibility in a specific, practical sense: how each party prefers information delivered, how much lead time either wants before a difficult board conversation, and whether the CEO candidate’s instinct under pressure is to bring the chair in early or to manage a problem alone for longer than they should.

Where a firm is filling both roles at once — a new chair and a new CEO in the same period — the assessment needs to run in both directions simultaneously, rather than filling one seat and hoping the second appointment adapts to whoever is already there. Where only one seat is open, the incoming candidate needs a genuine, unvarnished picture of how the existing post-holder actually works, not the polished version given in a first exploratory call.

Why This Sits With a Retained Search Process

Assessing chemistry properly takes time and depth that a contingency search process doesn’t accommodate — it requires structured reference conversations that go beyond standard competency checking, and often a facilitated conversation between the incoming candidate and the existing post-holder before an offer is made, not after. This is part of why senior chair and CEO appointments at FCA-regulated firms typically run through a retained search process rather than a contingency one — the depth of assessment the role actually needs doesn’t fit a model built around speed and volume.

Timing Makes This Harder, Not Easier, to Skip

Because SMF9 and SMF1 appointments carry Form A approval timelines that push the total process out to six to nine months from search commencement to start date, boards are often under real pressure to move the search itself along quickly to avoid the whole appointment stretching even further. That pressure is exactly what tempts a board to treat the chemistry assessment as a nice-to-have rather than a core part of the brief. It should run the other way: given how long the appointment is likely to last and how much the relationship’s quality will shape the years that follow, the extra weeks spent testing chemistry properly are a small fraction of the total timeline and one of the highest-value parts of it.

For the individual designations themselves, see our own guides to SMF9 and SMF1.