Accepting an SMF Role: Due Diligence Before You Say Yes
Firms spend weeks checking Senior Manager candidates. Candidates often spend far less time checking the firm. That’s a mistake. A Senior Manager takes on personal accountability for an area of the business, including problems that existed before they arrived. Accepting a role at a firm with weak controls, an unresolved regulatory issue or too few resources can put a career at risk. This guide sets out the due diligence a candidate should do before accepting a Senior Manager role, the questions to ask and the warning signs to look for.
Why Due Diligence Matters More for Senior Managers
Three features of the Senior Managers and Certification Regime make due diligence essential:
- The Duty of Responsibility. If a breach happens in your area and you didn’t take reasonable steps to prevent it, you can be held personally accountable. That includes problems you inherit.
- The Senior Manager Conduct Rules. You must take reasonable steps to make sure your area is controlled effectively and complies with the rules. See the Conduct Rules explained.
- Your regulatory record follows you. Problems at one firm can appear in regulatory references for six years and affect future approvals.
Due diligence won’t remove those risks, but it tells you what you’re taking on, lets you negotiate the resources you need, and gives you a record of what you knew when you started.
What to Check Before You Accept
| Area | What to check | Where to look |
|---|---|---|
| Regulatory status | Permissions, any restrictions or requirements, and the firm’s history | The FCA Register and FCA final notices |
| Open regulatory issues | Supervisory concerns, skilled person reviews, voluntary requirements, ongoing investigations | Ask directly; much of this isn’t public |
| Financial position | Profitability, capital and funding, especially for smaller firms | Companies House filings, and ask about capital headroom |
| Your responsibilities | The draft Statement of Responsibilities and where it sits in the responsibilities map | Ask for both before accepting |
| Resources | Team size, budget, systems and access to advice | Ask, and meet the team if possible |
| Governance | Board composition, independence, how the board challenges the executive | Meet the chair and, ideally, a non-executive director |
| Culture | How the firm treats bad news, complaints and challenge | Conversations, references from people who have worked there |
| Your predecessor | Why they left and what they would say about the role | Ask the firm, and ask to speak to them where appropriate |
| Protection | Directors’ and officers’ insurance and any company indemnity | Ask for policy details before accepting |
The Questions to Ask
Ask these directly, ideally of the chief executive, the chair and the person you’ll report to. How the firm answers is as revealing as the answers themselves.
- What are the biggest risks in the area I’ll be responsible for?
- Are there any open issues with the FCA or PRA, including commitments made to supervisors?
- Has the firm had a skilled person review, or does it expect one?
- What have internal audit and the external auditors said about this area recently?
- What resources will I have, and how would I get more if I needed them?
- Who will I report to, and will I have direct access to the board and its chair?
- Why did my predecessor leave?
- Will there be a handover, and can I see it before I start?
- How has the firm responded when a control function raised concerns in the past?
A firm that answers openly, including about its problems, is usually a better place to be a Senior Manager than one that insists everything is fine.
Scenario: A candidate is offered the MLRO role at a fast-growing payments firm. In due diligence, she learns the firm has a large backlog of transaction monitoring alerts and has recently received a letter from the FCA about its financial crime controls. Rather than turning the role down, she negotiates a funded remediation plan, an interim specialist to clear the backlog, and direct access to the board risk committee, and records her initial assessment on her first day. Twelve months later, the backlog is cleared and her record shows exactly what she inherited and what she did about it.
Warning Signs
| Warning sign | Why it matters |
|---|---|
| Reluctance to share the Statement of Responsibilities | You can’t assess a role you can’t see |
| Vague answers about regulatory contact | There may be issues the firm isn’t disclosing |
| Rapid turnover in the role | Previous holders may have left over unresolved concerns |
| A role far larger than the resources behind it | Reasonable steps may not be achievable |
| Pressure to start before approval | A sign the firm doesn’t understand, or respect, the regime; see SMF timing questions |
| No meaningful access to the board | You may not be able to escalate effectively |
| Unclear or absent D&O cover | You may be personally exposed to costs if things go wrong |
None of these automatically means you should decline. Many of the most rewarding Senior Manager roles are at firms that need fixing. But you should know what you’re walking into, and negotiate the support you need before you accept rather than after.
See our One Drive
Negotiating the Conditions for Success
Due diligence often turns into negotiation. Candidates who have identified a problem are in the strongest position to ask for what they need to fix it: budget, headcount, interim support, a realistic timetable or a revised Statement of Responsibilities. Firms that want a credible Senior Manager usually agree, because the regulator will look at whether the role is adequately resourced. Put what is agreed in writing. If the firm’s offer depends on regulatory approval, see our guide to offers subject to FCA approval, and for pay and buy-outs, structuring an SMF offer.
Recording What You Found
Once you’ve accepted and started, make a dated record of what you found: the issues identified in due diligence, the handover you received and your initial plan. This is not about protecting yourself at the firm’s expense. It is good practice, it supports the reasonable steps you’ll take, and it is invaluable if an inherited problem later comes to light. See what a good handover pack contains and the first 90 days for a new MLRO or compliance officer.
How a Specialist Recruiter Helps
A specialist SMF recruiter knows the firms in the market, often knows why previous holders left, and can ask the questions that are awkward for a candidate to ask directly. When we represent a candidate, we give them an honest view of the role and the firm, and we encourage firms to be open about the challenges, because it leads to better appointments that last. Current opportunities are on our jobs page, and you can register with us through our candidates page.
For Senior Manager Candidates
Roles, guidance and honest advice. Every SMF search is led personally by Adrian Lawrence FCA
Your Next Role
Current Senior Manager opportunities.
→ Current roles
→ Register with us
Approval
Getting through the process.
→ The fit and proper test
→ Preparing for interview
Accountability
What you’re taking on.
→ Statements of Responsibilities
→ Enforcement trends
Flexible Careers
Interim and fractional work.
→ Fractional and interim
→ Remote and hybrid
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
Can I ask to see the Statement of Responsibilities before accepting?
Yes, and you should. A firm should be able to share at least a draft before you commit.
Will a firm tell me about regulatory issues before I join?
A good firm will, under appropriate confidentiality. If a firm won’t discuss its regulatory position at all, treat that as a warning sign.
Am I responsible for problems that existed before I joined?
Once you’re approved, you’re expected to take reasonable steps over your area, including inherited problems. A record of what you found and what you did about it is important.
Should I turn down a role at a firm with problems?
Not necessarily. Many valuable roles involve fixing things. The key is knowing what you’re taking on and agreeing the resources to deal with it.
Should I check the firm’s D&O insurance?
Yes. Ask what cover is in place and whether there is a company indemnity, and take advice if you’re unsure what it covers.
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 Accountancy Capital. He leads every SMF Capital search personally and advises candidates on the roles they’re considering. 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.
