SMF13: The Chair of the Nomination Committee Explained
SMF13 is the Chair of the Nomination Committee function. It applies at larger regulated firms that have a nomination committee: banks, building societies, insurers and FCA Enhanced firms. The SMF13 holder leads the committee responsible for the composition of the board, succession planning for directors and senior executives, and the process for finding new board members. In a regime built on individual accountability, that makes the nomination committee chair responsible for something regulators care about a great deal: whether the right people are running the firm. This guide explains who needs SMF13, what the role involves and what regulators expect.
What Is SMF13?
SMF13 is one of the board-level Senior Manager Functions under the Senior Managers and Certification Regime. It covers the person who chairs the firm’s nomination committee. Like the other committee chair functions (SMF10 and SMF11 for the risk and audit committees, and SMF12 for the remuneration committee), it is held by a non-executive director, and it sits alongside the chair of the board (SMF9) and the senior independent director (SMF14).
Holding SMF13 means the person needs regulatory approval, has a Statement of Responsibilities and is subject to the Senior Manager Conduct Rules. The responsibilities are those of a non-executive: oversight and challenge, not day-to-day management. The rules are in the FCA’s SUP 10C and, for dual-regulated firms, the PRA Rulebook.
Which Firms Need an SMF13?
SMF13 only applies where the firm has, or is required to have, a nomination committee and falls within the parts of the regime that include the function.
| Firm type | SMF13 position |
|---|---|
| Banks and building societies | Applies where the firm has a nomination committee; PRA-designated, approved by the PRA with FCA consent |
| Insurers within Solvency II | Applies where the firm has a nomination committee; PRA-designated |
| FCA Enhanced firms | Applies where the firm has a nomination committee; approved by the FCA |
| FCA Core firms | Does not apply; Core firms don’t have the committee chair functions |
Many firms that need SMF13 are also subject to the Financial Reporting Council’s UK Corporate Governance Code, which sets expectations for nomination committees at listed companies, including independence and the board evaluation process. Regulated firms that aren’t listed often follow similar practice. Our guide to which SMFs apply at which tier shows where SMF13 sits in the wider structure.
What the Nomination Committee Does
The nomination committee’s remit varies, but at a regulated firm it typically covers:
- Board composition: reviewing the size, structure, skills, experience and diversity of the board, often using a board skills matrix.
- Appointments: leading the process for appointing new directors, including the brief, the search and the recommendation to the board.
- Succession planning: for the board and, increasingly, for Senior Managers more widely. Our SMF succession planning template is designed for nomination committees.
- Time commitment: checking that directors can give the role enough time, which is a particular regulatory focus; see NED time commitment and overboarding.
- Board effectiveness: overseeing evaluations of the board, its committees and individual directors.
- Diversity: setting and monitoring the board’s approach to diversity. See diversity and inclusion on regulated boards.
Why the Regulators Care
The regulators’ approach to governance rests on the idea that firms are only as good as the people running them. The nomination committee is where decisions about those people are prepared. A weak nomination process produces boards with skills gaps, too little independence, too little time or too little challenge, and those weaknesses often appear later as conduct or prudential failures.
For banks and insurers, the PRA also expects boards to be collectively suitable: the board as a whole must have the knowledge, skills and experience to understand the firm’s activities and risks. That makes the nomination committee the engine of the PRA’s collective suitability assessment. Our guide to PRA collective suitability explains what that means for board appointments.
Scenario: A mid-sized insurer’s risk committee chair announces she will step down in nine months. The nomination committee chair, approved as SMF13, reviews the board skills matrix and finds that the departure will leave no director with recent actuarial or reserving experience. She briefs the committee on the gap, agrees a role profile, commissions an external search with a diverse longlist, and plans the timetable to allow for PRA approval of the new SMF10. The replacement is approved before the outgoing chair leaves, and the board’s collective suitability is never in question.
What Regulators Expect of the SMF13 Holder
The SMF13 holder is assessed against the fit and proper test like any Senior Manager. In practice, the regulator is looking for:
- independence, and the standing to challenge the chair and chief executive on board composition
- experience of board appointments, succession and effectiveness reviews
- an understanding of the firm’s business, risks and regulatory environment, so they can judge what the board needs
- a working knowledge of the SMCR, including the approval process for Senior Managers
- enough time to do the role properly, alongside any other commitments
- a record of handling sensitive people decisions with discretion and fairness
In many firms, the board chair also chairs the nomination committee. Where that happens, the chair’s Statement of Responsibilities and the firm’s responsibilities map should reflect both roles. The committee should have arrangements for the chair’s own succession to be led by someone else, usually the senior independent director. Our guide to combining Senior Manager roles covers the issues.
Common Weaknesses
| Weakness | Why it matters | Better practice |
|---|---|---|
| Appointments driven by the chair’s network | Limits diversity of thought and independence | A written role profile, a structured search and a diverse longlist |
| Succession planning only for the CEO | Leaves gaps in control functions and committee chairs | Plans for every Senior Manager role, with interim cover identified |
| No regulatory approval time in the plan | Vacancies open up before replacements are approved | Build approval time into every succession timetable |
| Skills matrix not updated | The board can’t see its own gaps | Review the matrix at least annually and before every appointment |
| Time commitment not tested | Overboarded directors give too little time | Ask about commitments at appointment and annually |
Recruiting an SMF13, and Working With One
Firms recruit an SMF13 in two situations: when they need a new non-executive to chair the committee, or when an existing director takes on the role. In both cases, the candidate needs approval before performing the function. When an existing approved NED takes on SMF13, the firm still needs to apply for the new function and update the Statement of Responsibilities.
The nomination committee chair is also one of the most important people a recruiter works with. A good SMF13 sets a clear brief, insists on a diverse and evidence-based process, and holds the board to a realistic timetable. We work with nomination committees on board and Senior Manager appointments; see our chair and committee chair recruitment service.
Board and Committee Recruitment
Chairs, committee chairs and non-executives for regulated boards. Every SMF search is led personally by Adrian Lawrence FCA
Chairs and Committees
SMF9 to SMF14 searches.
→ Chair and committee chairs → Multi-SMF board buildsNEDs at regulated firms →
Governance
Structure and succession.
→ SMF structure review → Succession planning templateBoard skills matrix →
Dual-Regulated Boards
Banks and insurers.
→ Banks and building societies → InsuranceCollective suitability →
Board SMFs
The other board functions.
→ SMF9 chair → SMF14 senior independent directorAll SMF designations →
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
What is SMF13?
SMF13 is the Chair of the Nomination Committee function, held by the non-executive director who chairs the firm’s nomination committee.
Which firms need an SMF13?
Banks, building societies, Solvency II insurers and FCA Enhanced firms that have a nomination committee. Core firms don’t have this function.
Can the board chair also be the SMF13?
Yes, and this is common. The firm should make sure the chair’s own succession is led by someone else, usually the senior independent director.
Does an existing NED need approval to become SMF13?
Yes. Taking on the committee chair role is a new function, so the firm must apply for approval and update the Statement of Responsibilities.
What does the SMF13 do about Senior Manager succession?
The nomination committee usually oversees succession for the board and, increasingly, for all Senior Manager roles, including how vacancies will be covered while replacements are approved.
Can you help our nomination committee with an appointment?
Yes. We work with nomination committees on chair, committee chair, NED and executive Senior Manager appointments.
About the Author
Adrian Lawrence FCA is the founder of SMF Capital. He is a Chartered Accountant and Fellow of the ICAEW, holds a practising certificate in his own name, and is a former listed-company Finance Director with a BSc from Queen Mary College, University of London. He founded FD Capital in 2018 and has since built a network of five specialist recruitment practices, including NED Capital for non-executive and board appointments. He leads every SMF Capital search personally and works closely with nomination committees on board-level appointments. View Adrian’s ICAEW profile.
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