The Basic Rules

There’s no general prohibition on one person holding several Senior Manager Functions. The regulators look at three things:

• Time. Can the individual realistically discharge every function and every Prescribed Responsibility they hold?
• Competence. Do they have the knowledge and experience for each function, not just one?
• Independence and conflicts. Does combining the roles undermine challenge or create a conflict of interest?

Each function needs its own approval, and the individual’s Statement of Responsibilities must cover everything they’re accountable for. Under the Senior Managers and Certification Regime, adding a function to someone who is already approved needs a further approval application.

Common Combinations at a Glance

“Likely questioned” doesn’t mean prohibited. It means the firm should expect to explain the arrangement and the safeguards, and should consider whether separating the roles would be better.

The Combinations in More Detail

Compliance Officer and MLRO

The most common combination, and one the regulator generally accepts at smaller firms. The individual needs expertise in both compliance and financial crime, enough time, and cover for when they’re away. Our page on who can be your MLRO or compliance officer answers the related questions.

Chief Finance and Chief Operations

At smaller Enhanced firms, the finance director often runs operations too. It works where the individual has operational and technology experience as well as finance, and enough time. As operational resilience demands grow, many firms separate the roles. See chief operating officer recruitment.

Chief Risk Officer and Compliance

Both roles provide challenge, so combining them doesn’t create the obvious conflict that combining risk with a business role would. But the combined workload can be heavy, and the regulators may question whether one person can do both properly at a firm of any size. It’s more common at smaller investment firms than at banks or insurers. See chief risk officer recruitment.

Chief Executive and Chair

Separating the chair and the chief executive is one of the most basic governance expectations, reflected in the UK Corporate Governance Code. At very small firms, a founder may act as both, but as soon as a firm has a board of any substance, the regulators will expect an independent or non-executive chair. See chair and committee chair recruitment.

Committee Chairs

At smaller firms, one independent non-executive sometimes chairs both the audit and risk committees. At larger firms, and particularly dual-regulated firms, the regulators usually expect separate chairs, partly because each committee needs focused, expert leadership. Recruiting an additional independent non-executive is often the answer. NED Capital, a sister practice, specialises in non-executive appointments.

Internal Audit

The head of internal audit must be independent of the areas internal audit reviews. Combining SMF5 with a compliance, risk or business role undermines that independence and is very likely to be questioned.

Compliance Officer and Data Protection Officer

This isn’t an SMF combination, because the data protection officer isn’t a Senior Manager Function. It’s common at smaller firms. Data protection law requires the DPO not to have conflicting tasks, so check the combination with the ICO’s guidance in mind.

The Same Function Across Group Companies

One person can hold, for example, SMF16 at several regulated companies in a group, with approval at each. Each firm’s regulator will want to see that the individual has enough time and understands each firm’s business. See our article on group SMF roles.

Safeguards When Roles Are Combined

When Separating the Roles Makes Sense

• The firm is growing quickly or moving from Core to Enhanced. See becoming an Enhanced firm.
• One of the functions is under supervisory attention or remediation.
• The individual’s time is clearly stretched.
• One role is meant to challenge the other.
• The regulator has asked about the arrangement.

Separating roles often means a new hire, and sometimes a fractional one is enough. The board should record its decision either way, so it can explain the reasoning if the regulator asks. Our governance and SMF structure review looks at how responsibilities are allocated across a firm’s Senior Managers.

Frequently Asked Questions

Is there a limit on how many SMFs one person can hold?

No fixed limit. The regulators assess whether the person can realistically discharge each function.

Does each function need a separate approval?

Yes. Each Senior Manager Function needs approval, and adding a function to someone already approved needs a further application.

Can a fractional Senior Manager hold functions at several unrelated firms?

Yes, with approval at each firm and enough time for each. Many fractional compliance officers and MLROs do.

Will the regulator reject a combination outright?

Rarely outright. More often it will ask questions, and the firm will need to explain the safeguards or reconsider.