Compliance Officer for Consumer Credit Firms: When You Need an SMF16 and the Profile That Works
Consumer credit is one of the most closely watched parts of the FCA’s remit, and the compliance officer’s job is shaped by affordability, arrears, vulnerable customers and the Consumer Duty. But not every consumer credit firm needs an SMF16. This guide explains which firms do, what the role involves at a lender or credit broker, the experience profile that works, and when a fractional compliance officer is enough.
Does Your Consumer Credit Firm Need an SMF16?
It depends on your permission and your tier under the Senior Managers and Certification Regime.
- Full-permission consumer credit firms, such as lenders, debt collectors, debt advice firms and credit brokers whose main business is broking, are usually Core firms. Core firms need an SMF16 Compliance Oversight holder, approved by the FCA.
- Limited-permission consumer credit firms, such as retailers and other businesses that broker or offer credit only as a secondary activity, are usually Limited Scope firms. They have a much narrower set of Senior Manager Functions, typically the SMF29 Limited Scope Function, and most will not need an SMF16.
- Larger firms that meet the Enhanced thresholds need SMF16 alongside the wider Enhanced requirements. See becoming an Enhanced firm.
Check your own permissions and tier before you recruit; our guides to which SMFs apply at which firm tier and the SMF29 Limited Scope Function set out the detail. Whether you also need an SMF17 MLRO depends on whether the firm is within the Money Laundering Regulations, which many lenders are and many pure credit brokers are not. Confirm it for your own firm.
Even a Limited Scope firm needs someone who understands the consumer credit rules. The difference is whether that person needs FCA approval as a Senior Manager.
What the Role Involves
The consumer credit rules sit mainly in the FCA’s Consumer Credit sourcebook (CONC), alongside the Consumer Credit Act and the Consumer Duty. At a consumer credit firm, the compliance officer typically owns oversight of:
- Creditworthiness and affordability. Whether lending decisions are based on a proper assessment of the customer’s ability to repay, and whether the evidence supports it.
- Arrears, forbearance and collections. How customers in financial difficulty are treated, and whether collections practices are fair.
- Vulnerable customers. Identifying and responding to vulnerability across the customer journey. See vulnerable customers: what the FCA expects.
- Financial promotions and lead generation. Advertising, comparison sites, introducers and affiliates, and the promotions they produce. See the compliance officer’s role in financial promotions.
- Broker remuneration and disclosure. How commissions are structured and disclosed, an area that has drawn close attention across the market.
- Complaints. Handling complaints well, analysing root causes and managing Financial Ombudsman Service referrals.
- Consumer Duty outcomes. Evidencing that customers receive fair value and good outcomes, and supporting the annual board report.
Lenders and Brokers Need Different Profiles
| Firm type | Where the risk sits | What to look for in a compliance officer |
|---|---|---|
| Lender | Affordability, arrears, forbearance, collections, product value | Experience of credit risk policy, arrears management and outcomes testing on a loan book |
| Credit broker | Promotions, lead generation, introducers, commission disclosure, panel oversight | Experience of broker models, financial promotions and oversight of introducers and lender panels |
| Debt collection or purchase | Treatment of customers in difficulty, vulnerability, complaints | Experience of collections conduct, vulnerability and complaints at volume |
| Motor and retail finance | Dealer and retailer oversight, commission, product suitability | Experience of intermediary oversight and point-of-sale finance |
Our guide to the experience that matters for your type of firm compares consumer credit with other sectors.
The Profile That Works
Across consumer credit firms, the strongest compliance officers combine:
- Hands-on CONC knowledge, applied to real lending or broking decisions rather than recited.
- Outcomes thinking. The ability to design tests that show whether customers are being treated fairly, using the firm’s own data.
- Experience of remediation. Many consumer credit firms have reviewed past lending or customer treatment. Candidates who have run or overseen a remediation bring valuable judgement.
- Commercial pragmatism. Credit businesses move quickly on pricing, products and partners. The compliance officer needs to give clear answers fast.
- Regulator experience. Handling information requests, attestations or a supervisory visit in a consumer credit context.
Scenario: A full-permission credit broker introduces customers to a panel of lenders through comparison sites and affiliates. Its managing director has been holding SMF16. After growth in volumes and a rise in complaints about promotions, the board appoints a fractional compliance officer with broker experience for one day a week to hold SMF16, review the introducer arrangements and rebuild the monitoring plan. The managing director keeps his executive role, now with proper second-line challenge.
Questions to Ask a Consumer Credit Compliance Candidate
- How would you test whether our affordability assessments are working, using our own data?
- Talk us through how you would review our arrears and forbearance process against CONC 7.
- How do you oversee introducers, affiliates and comparison sites, and what would make you stop working with one?
- What would you want to see in our Consumer Duty fair value assessment?
- Tell us about a remediation exercise you led or oversaw. What did you learn?
- Which of our products or channels would worry you most, and why?
- How would you report compliance risk to our board, and how often?
Strong answers are specific to your products and channels, use data rather than opinion, and show the candidate has made difficult calls before. Our guide to interviewing a head of compliance covers the wider interview, and pre-offer checks covers what to verify before an offer.
Fractional or Full-Time?
Many smaller credit brokers and specialist lenders are well served by a fractional compliance officer holding SMF16 for one to two days a week. Larger lenders, firms with significant arrears books and those under close supervision usually need a full-time compliance officer and often a team. Our pages on fractional compliance officers and fractional or full-time explain the choice, and when the managing director is also the compliance officer covers a common arrangement at smaller firms.
Recruiting Your Consumer Credit Compliance Officer
Start the brief with your permissions, your tier and your three biggest conduct risks. Those determine whether you need an SMF16, how many days the role needs and which experience matters most. Our consumer credit recruitment page explains how we run these searches, and the compliance officer and MLRO job description template is a useful starting point. For pay, see our salary guide.
Related Services and Guides
Compliance leadership for consumer credit firms. Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate
Consumer Credit
Senior Managers for lenders and brokers.
→ Consumer credit recruitment → Brokers and small advice firmsVulnerable customers →
Compliance Officers
Permanent and fractional SMF16.
→ Compliance officer (SMF16) → Fractional compliance officerWhat is SMF16? →
Firm Tiers
Which functions you need.
→ SMFs by firm tier → SMF29 Limited Scope FunctionBecoming Enhanced →
Consumer Duty
Outcomes and board reporting.
→ Consumer Duty for Senior Managers → The annual compliance reportConsumer Duty board champion →
Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate
Frequently Asked Questions
Does a consumer credit firm need an SMF16?
Full-permission consumer credit firms are usually Core firms and need an SMF16. Limited-permission firms are usually Limited Scope firms and most do not. Check your permission and tier.
Does a credit broker need an MLRO?
It depends on whether the firm is within the Money Laundering Regulations. Many pure credit brokers are not, while many lenders are. Confirm it for your firm.
Can a credit broker use a fractional compliance officer?
Yes. Many smaller credit brokers appoint a fractional compliance officer to hold SMF16 for one to two days a week.
Can our managing director be the compliance officer?
At a small firm it is possible, but it is hard to challenge your own commercial decisions. Many firms bring in a fractional compliance officer once volumes or complaints grow.
What experience matters most?
Hands-on CONC knowledge applied to your model, outcomes testing and, for brokers, oversight of promotions, introducers and lender panels.
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 oversees every SMF Capital search. View Adrian’s ICAEW profile.
Need a Compliance Officer for Your Consumer Credit Firm?
Tell us about your permissions, your business and your risks. We’ll come back the same working day with a view on whether you need an SMF16 and who is available.
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 oversees every Senior Manager Function search.