Adding an Executive to the Board of an FCA-Regulated Firm: A Checklist
Adding an executive to the board of an unregulated company is a board resolution and a Companies House filing. At an FCA-regulated firm, it is a regulatory event. In most cases the new board member becomes a Senior Manager, needs approval before taking the seat, and takes on personal accountability under the Senior Managers and Certification Regime. Firms that treat the appointment as routine company secretarial work are the ones that end up with a director on the board before approval, a vague Statement of Responsibilities or an application that stalls. This checklist sets out the steps in order, whether the new director is an external hire or an internal promotion.
The Checklist at a Glance
| Stage | Step | Owner |
|---|---|---|
| 1. Before recruiting | Confirm the designation and draft the Statement of Responsibilities | Company secretary, compliance |
| 2. Before recruiting | Update the draft responsibilities map | Compliance |
| 3. Recruiting | Assess fit and proper, and plan regulatory references | HR, recruiter, compliance |
| 4. Offer | Make the offer conditional on approval | Chief executive, HR |
| 5. Application | Prepare and submit Form A | Compliance |
| 6. Waiting | Manage timing, notice period and interim arrangements | Chief executive, HR |
| 7. Approval | Appoint to the board, then make the filings | Board, company secretary |
| 8. After appointment | Induction, Conduct Rules and first-year review | Chair, compliance |
1. Confirm the Designation First
Before writing a job description, confirm which Senior Manager Function the new director will hold. For most executive directors at Core firms, it will be SMF3, the Executive Director function. At Enhanced firms, banks and insurers, an executive with a specific role may need a more specific function instead, such as SMF2 for the chief finance function or SMF24 for chief operations. A senior executive at an Enhanced firm who has overall responsibility for an area but does not join the board may need SMF18, Other Overall Responsibility, rather than SMF3.
We cover the SMF3 and SMF18 distinction in detail in SMF3 or SMF18: getting the designation right, and the function itself in SMF3 explained. The rules are in the FCA’s SUP 10C. If the designation is unclear, take advice from your compliance team or advisers before going further: almost everything that follows depends on it.
2. Draft the Statement of Responsibilities and Update the Map
SMF3 is triggered by the board seat rather than by a specific area, so the accountability comes from what the firm writes in the Statement of Responsibilities. A vague statement that says only “executive director” is a common reason for questions from the regulator. A good statement sets out the business areas and functions the person is responsible for, any Prescribed Responsibilities allocated to them, and their role on the board and its committees. Our guide to writing a Statement of Responsibilities and our template help.
At the same time, update the draft responsibilities map (required for Enhanced firms, and good practice elsewhere) so that the new director’s responsibilities fit with everyone else’s, without gaps or overlaps. If responsibilities are moving from an existing Senior Manager, their Statement of Responsibilities will need updating too.
3. Assess Fit and Proper, and Plan References
Every Senior Manager is assessed against the fit and proper standards: honesty and integrity, competence and capability, and financial soundness. The firm must be satisfied the candidate meets them before applying. The checks are set out in our guide to the fit and proper test and our assessment template.
- criminal records and credit checks
- directorships, past and present, including any insolvencies
- previous regulatory approvals and any regulatory history
- regulatory references covering the previous six years
- qualifications and evidence of relevant experience for the responsibilities in the Statement
- any disclosures the candidate needs to make, raised early
Regulatory references can take weeks to arrive, so request them as soon as the preferred candidate is identified. See regulatory references and the six-year rule.
4. Make the Offer Conditional on Approval
For an external hire, the offer should be conditional on regulatory approval, and the start date should be planned around both the candidate’s notice period and the regulator’s timetable. For an internal promotion, the board appointment should be conditional in the same way, even though the person is already employed. Our guide to offers subject to FCA approval explains how to structure this and keep candidates engaged, and structuring an SMF offer covers buy-outs and deferred pay.
5. Prepare and Submit Form A
The application is made on Form A, supported by the Statement of Responsibilities and, where relevant, the updated responsibilities map. Incomplete or inconsistent applications are the main cause of delay: mismatched dates, gaps in employment history, missing directorships and Statements of Responsibilities that don’t match the map. Our guide to what goes wrong in Form A submissions lists the common errors. For significant roles, the regulator may interview the candidate; see preparing for an approval interview.
6. Manage the Wait
The regulator has a statutory period in which to decide on a complete application, and dual-regulated firms need both PRA and FCA involvement. In practice, the time from offer to board seat often runs to several months once the candidate’s notice period is included. Our guide to how long an SMF appointment takes gives realistic timings. If the board seat is replacing someone who has left suddenly, the firm will also need interim arrangements; see urgent SMF replacement.
During the wait, the candidate can often join the firm in a non-board role and begin learning the business, provided they don’t perform the Senior Manager Function before approval. See can we appoint them yet?
7. Appoint, Then File
Only once approval is granted should the board formally appoint the new director. The order matters:
- Approval received. Confirm the approval covers the function and the start date.
- Board resolution. Minute the appointment, the effective date and the Statement of Responsibilities.
- Companies House. File the director’s appointment within the required period. See Companies House guidance.
- Internal records. Update the responsibilities map, the firm’s register of Senior Managers and any group governance documents.
- Announcements. Make any internal or external announcement after approval, not before.
Scenario: A Core investment manager decides to promote its head of operations to the board ahead of a planned investment from a new shareholder. The investor’s lawyers draft the board resolution and a press release for the completion date. Two weeks before completion, the compliance officer points out that the board seat triggers SMF3 and that no application has been made. The firm moves the appointment to a later date, submits Form A with a Statement of Responsibilities covering operations, outsourcing and operational resilience, and announces the appointment once approval is granted. The investment completes on time, with the board change following later.
8. After Appointment: Induction and the First Year
A new executive director, particularly a first-time Senior Manager, benefits from a structured induction covering the Conduct Rules, the Duty of Responsibility and the firm’s governance. The Senior Manager Conduct Rules are set out in the FCA’s COCON sourcebook and explained in our guide to the Conduct Rules. In the first year, the chair should check that the new director is receiving the management information they need to take reasonable steps over their area, and that their Statement of Responsibilities still reflects what they actually do. The FCA’s SMCR pages explain the ongoing expectations, including annual fitness and propriety assessments.
External Hire or Internal Promotion?
The checklist applies to both, but the risks differ. External hires bring fresh experience but take longer, because of notice periods and references. Internal promotions are quicker, but firms sometimes forget that the person needs approval at all, or underestimate how much their accountability changes. Our guide to internal promotion or external hire covers the decision. Where the firm runs an external search, our executive director recruitment service builds every step of this checklist into the process, from confirming the designation to supporting the application.
Executive and Board Recruitment
Board-level Senior Managers who can be approved. Every SMF search is led personally by Adrian Lawrence FCA
Executive Directors
Board-level executives.
→ Executive director (SMF3)
→ SMF18 recruitment
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
Can we appoint the director and apply for approval afterwards?
No. The person must be approved before they perform the Senior Manager Function, which for SMF3 means before they take the board seat.
Does promoting an existing employee to the board need approval?
Yes. An internal promotion triggers the same approval requirement as an external hire.
What if the executive won’t sit on the board?
They may not need SMF3. At Enhanced firms, banks and insurers they may need SMF18 or a more specific function if they have overall responsibility for an area. At Core firms they may fall within the Certification Regime instead.
How long does the whole process take?
Typically several months from offer to board seat, depending on the candidate’s notice period and the regulator’s assessment.
Can you help with an external search?
Yes. We recruit executive directors and other board-level Senior Managers, with designation and approvability checked from the start.
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.
Adding an Executive to Your Board?
Tell us about the role and your firm. We’ll confirm the designation with you, agree the brief and come back the same working day.
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.
