Hiring a Compliance Officer: The Experience That Matters for Your Type of Firm
Every FCA-regulated firm needs a compliance officer, but the job is not the same everywhere. A compliance officer who is excellent at a discretionary investment manager may struggle at a consumer lender, and someone who has built compliance at a payments start-up may not be the right fit for a building society. The most common hiring mistake we see is treating compliance experience as interchangeable. This guide sets out the experience that matters most for each type of firm, so you can focus your search on the candidates who will be credible to your board and to the regulator.
Why Sector Experience Matters for SMF16
At most Core and Enhanced firms, the compliance officer holds the Compliance Oversight function, SMF16, and must be approved by the FCA before starting. The regulator assesses each candidate against the fit and proper standards, and competence is judged against the specific role. A candidate with strong compliance experience in an unrelated sector may still be approved, but they will need to show how their experience translates, and the firm will need to explain how it will support them. Our guide to the fit and proper test explains the assessment.
Sector experience also matters for a simpler reason: the compliance officer needs to understand the firm’s products, customers and risks quickly. The FCA’s rules in SYSC 6.1 require a compliance function that is effective, and that depends on the compliance officer knowing where the real risks lie.
The Experience That Matters, by Firm Type
| Firm type | Experience to prioritise | Typical gaps to probe |
|---|---|---|
| Advice firms and IFAs | Suitability, advice file reviews, ongoing advice and fees, pension transfers where relevant, Consumer Duty outcomes, adviser competence (T&C) | Candidates from product providers may lack hands-on advice file experience |
| Wealth and investment managers | Suitability for discretionary and advisory services, best execution, client categorisation, CASS oversight, MiFID-derived conduct rules, financial promotions | Limited experience of client money and assets, or of investment firm prudential rules |
| Consumer credit | Affordability and creditworthiness, forbearance and arrears, vulnerable customers, complaints and redress, CONC rules, Consumer Duty | Candidates from investment firms may underestimate the volume and nature of retail credit complaints |
| Insurance intermediaries | Product governance and value, ICOBS, claims and complaints handling, appointed representatives and delegated authority oversight | Experience limited to one distribution model, such as direct only |
| Payments and e-money | Safeguarding, PSRs and EMRs, conduct of business for payment services, outsourcing and operational resilience, often combined with MLRO duties | Candidates from banks may be used to much larger teams and systems |
| Cryptoasset firms | Financial promotions rules for cryptoassets, financial crime controls, the developing regulatory regime and FCA engagement on authorisation or registration | Genuine crypto experience is scarce; check depth, not just sector exposure |
| Banks and building societies | Dual regulation, larger compliance teams, conduct risk frameworks, regulatory change, and working with second and third lines | Candidates from smaller firms may lack experience of PRA-regulated governance |
These are starting points, not rules. A candidate from an adjacent sector with strong transferable experience can be the right choice, particularly when combined with a good induction. Our sector pages cover each market in more detail: wealth management, investment managers, consumer credit, insurance, payments and fintech, crypto-assets and banks and building societies.
Experience That Matters Everywhere
Whatever the sector, some experience is valuable in almost every compliance officer hire:
- Building a risk-based monitoring plan and running it, not just inheriting one; see what the board should expect from a compliance monitoring plan
- Consumer Duty implementation for firms with retail customers, including outcome testing and the annual board report; see the FCA’s Consumer Duty pages
- Direct FCA engagement, such as supervisory meetings, information requests, thematic reviews or authorisation
- Board reporting, including clear, concise reports that lead to decisions
- Previous SMF16 approval, or documented experience deputising for a compliance officer
- Financial crime knowledge, particularly where the role may also hold SMF17
The Size of the Firm Matters Too
Sector is only half the picture. A compliance officer moving from a large firm to a small one, or the other way round, faces a very different job.
| Move | What to test for |
|---|---|
| Large firm to small firm | Willingness to do hands-on work without a team, and to make proportionate judgements without extensive policies and committees |
| Small firm to large firm | Experience of managing a team, working within a three lines of defence model and influencing senior executives across several business areas |
| Start-up or applying firm | Experience of building a compliance framework from scratch and supporting an authorisation; see building an SMF team from scratch |
| Firm under remediation | Experience of skilled person reviews, supervisory pressure and leading change at pace |
For smaller firms, the right answer may not be a full-time hire at all. A part-time compliance officer with exactly the right sector experience is often a better fit than a full-time generalist.
Should the Compliance Officer Also Be the MLRO?
Many smaller firms combine SMF16 and SMF17. If you plan to, the candidate needs genuine financial crime experience as well as conduct compliance experience, and enough time to do both properly. That narrows the pool, especially in payments and crypto, where financial crime risk is high. Our guide to combining Senior Manager roles explains what the regulator looks for, and our MLRO recruitment page covers searches for the MLRO role on its own.
Scenario: A growing consumer lender shortlists two compliance officer candidates. One is a highly regarded head of compliance from an investment manager; the other is a deputy compliance officer from a larger lender who has never held SMF16. The board initially favours the first candidate’s seniority. When they explore each candidate’s experience against the firm’s risks, it becomes clear that affordability, arrears handling and complaints are the lender’s biggest exposures, and only the second candidate has handled them in depth. The lender appoints the deputy, who is approved as SMF16 with a documented record of deputising, and supports her with a quarterly external review of the monitoring plan in her first year.
Testing Depth, Not Just Exposure
A CV that lists a sector is not the same as deep experience of it. A candidate may have worked at a payments firm while focusing mainly on complaints, or at a wealth manager without ever owning CASS oversight. In interview, ask candidates to walk through specific pieces of work: a review they designed, an issue they escalated, a policy they rewrote or a regulatory request they handled. The detail in their answers shows whether they have done the work themselves or watched others do it. References from previous compliance colleagues, not only line managers, can also help confirm the depth of a candidate’s hands-on experience.
How to Use This When You Recruit
Before starting a search, write down the three or four regulatory risks that matter most to your firm. They should shape the job description, the shortlist criteria and the interview. Our guide to writing an SMF job description explains how to build the role around accountability, and our guide to interviewing an SMF candidate has questions that test real experience rather than familiarity with the rules.
When we run compliance officer recruitment, we start from those risks and search for candidates whose experience matches them, across your sector and adjacent ones. Every candidate is pre-assessed for approvability before reaching the shortlist.
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Frequently Asked Questions
Can a compliance officer move between sectors?
Yes, and many do successfully. The candidate needs to show how their experience applies to the new firm’s risks, and the firm should plan a proper induction.
Is previous SMF16 approval essential?
No. A well-prepared first-time candidate with strong relevant experience, especially documented deputising, can be approved.
What matters most for a small firm?
Hands-on sector experience and the ability to work without a team. Seniority alone is less important than relevance.
Should we look for financial crime experience too?
If the compliance officer may also hold SMF17, yes. Even where the roles are separate, a working knowledge of financial crime is valuable.
How long does a compliance officer search take?
Typically three to five weeks to a shortlist, plus notice periods and the FCA’s assessment of the application.
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. He leads every SMF Capital search personally. View Adrian’s ICAEW profile.
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Adrian Lawrence FCA is the founder of SMF Capital and a Fellow of the Institute of Chartered Accountants in England and Wales and holds an ICAEW practising certificate in his own name. He holds a BSc from Queen Mary College, University of London, and has over 25 years of experience working with boards, investors and business owners across the UK. He founded SMF Capital to help FCA and PRA-regulated firms appoint the Senior Managers the regulators expect, with the fit and proper assessment built into every search, and personally leads every Senior Manager Function search.
