Compliance Officer Quiz: Test Your SMF16 Knowledge
Sixteen questions for compliance officers, heads of compliance and anyone preparing for an SMF16 role: the function, monitoring and breach reporting, Consumer Duty, outsourcing and personal accountability. Reveal each answer as you go.
How This Quiz Works
There are 16 questions on the compliance officer role and SMF16. Most are multiple choice. Read each question, choose your answer, then select Show answer to see the correct answer, a short explanation and a link to the full guide. Keep a note of your score and check it against the guide at the end.
The questions reflect the FCA rules as we understand them, including the 2026 changes to the Senior Managers and Certification Regime. They are a learning aid, not an official FCA test, and nothing here is legal advice.
Running a training session? Download this quiz as a Word document, with the questions first and the answers on a separate page.
This quiz is part of our SMCR quiz series:
The SMF16 Role
The function and the people who hold it.
Question 1
Which part of the FCA Handbook requires firms to have a compliance function?
- COBS 4
- SYSC 6.1
- SUP 15
- PRIN 2A
Show answer
Answer: B, SYSC 6.1. SYSC 6.1 requires an adequate compliance function that operates independently and has the authority, resources, expertise and access it needs.
Read more: What is SMF16?
Question 2
Which firms need an SMF16?
- Every regulated firm
- Core and Enhanced SMCR firms
- Only Enhanced firms
- Only dual-regulated firms
Show answer
Answer: B. SMF16 applies to Core and Enhanced firms. Limited Scope firms have a narrower set of functions.
Read more: Which SMFs apply at which firm tier
Question 3
Can an SMF16 be fractional, working for the firm one or two days a week?
- No
- Yes, if they have enough time for the firm’s risks
- Only in Limited Scope firms
- Only for the first year
Show answer
Answer: B. There is no requirement for SMF16 to be full-time. The FCA looks at whether the person has enough time, taking account of their other roles.
Read more: Fractional compliance officer (SMF16)
Question 4
Is there a limit on how many firms one person can be SMF16 for?
- Yes, two
- Yes, five
- No numerical limit, but each firm and the FCA must be satisfied they have the time
- They can only work for one firm
Show answer
Answer: C. Each appointment is approved separately, and the regulator will look at the whole portfolio.
Read more: Holding SMF16 at more than one firm
Question 5
Can a compliance consultant who is not approved hold SMF16 for a firm?
- Yes, under a contract
- No, the holder must be approved for the firm
- Yes, if the board agrees
- Only for a Limited Scope firm
Show answer
Answer: B. A consultant can support the function, but only an individual approved by the FCA for the firm can hold SMF16.
Read more: Compliance consultant or approved SMF16?
Question 6
Is the compliance lead of an e-money institution an SMF16?
- Yes
- No
- Only if it also lends
- Only after five years
Show answer
Answer: B, no. E-money and payment institutions are not within the SMCR in the same way as FSMA firms, so their compliance lead is not formally an SMF16.
Read more: Compliance officer for fintech and payments firms
Running the Function
Monitoring, breaches and reporting to the board.
Question 7
What should a compliance monitoring plan be?
- A fixed list of checks repeated every year
- Risk-based and approved by the board
- Written by the external auditor
- Optional for small firms
Show answer
Answer: B. A good monitoring plan targets the firm’s biggest compliance risks and is approved and overseen by the board.
Read more: Compliance monitoring explained
Question 8
Where are the FCA’s rules on notifying it of breaches and other matters?
- SUP 15
- SYSC 8
- CASS 7
- DISP 1
Show answer
Answer: A, SUP 15. SUP 15 sets out what firms must notify to the FCA, including significant breaches of rules.
Read more: The annual compliance report
Question 9
How often must the board review and approve the Consumer Duty assessment of customer outcomes?
- Monthly
- At least annually
- Every three years
- Only when the FCA asks
Show answer
Answer: B, at least annually. The board, or equivalent governing body, must review and approve a report on whether the firm is delivering good outcomes for retail customers at least once a year.
Read more: Consumer Duty for Senior Managers
Question 10
Is there an FCA ratio for how many compliance staff a firm must have?
- Yes, one per 50 staff
- Yes, one per £10 million revenue
- No, the function must be adequately resourced for the firm’s risks
- Only for banks
Show answer
Answer: C. Sizing is a judgement based on the firm’s customers, products and risks, and the SMF16 should raise it if the function is under-resourced.
Read more: Sizing the compliance team
Question 11
Can a firm outsource its compliance function?
- Yes, including responsibility
- It can outsource tasks, but it keeps responsibility and must oversee the work
- No, never
- Only to an auditor
Show answer
Answer: B. Outsourced work must be overseen under the FCA’s outsourcing rules, and the approved SMF16 remains accountable.
Read more: What you can and can’t outsource
Question 12
Why does the independence of the compliance function matter?
- It does not
- So it can challenge the business and report freely to the board
- So compliance staff can set their own pay
- So it can avoid board meetings
Show answer
Answer: B. Independence lets the compliance officer challenge commercial decisions and escalate concerns without fear of the consequences.
Read more: Compliance officer and MLRO independence
Accountability
What the regulator expects of the person who holds SMF16.
Question 13
Under the duty of responsibility, who must prove that a Senior Manager failed to take reasonable steps?
- The Senior Manager
- The FCA
- The firm’s auditor
- The board
Show answer
Answer: B, the FCA. The regulator must show the Senior Manager did not take the steps a person in their position could reasonably be expected to take. Good records are the best protection.
Read more: The duty of responsibility
Question 14
For MiFID investment firms, how often must the compliance function report to the management body?
- Monthly
- At least annually
- Every two years
- Never
Show answer
Answer: B, at least annually. MiFID investment firms’ compliance functions must report at least once a year. Other firms are not prescribed the same terms, but an annual report is good practice.
Read more: The annual compliance report
Question 15
Which Individual Conduct Rule is breached by failing to respond fully and accurately to questions from the FCA?
- Rule 1
- Rule 2
- Rule 3
- Rule 5
Show answer
Answer: C, Rule 3. Individual Conduct Rule 3 requires you to be open and cooperative with the FCA, the PRA and other regulators.
Read more: The Conduct Rules explained
Question 16
A newly authorised firm’s first SMF16 has never held the function before. What will the FCA most want to see?
- Nothing, it is not relevant
- Relevant experience at the level below, a realistic plan, enough time and support
- A law degree
- Ten years at the FCA
Show answer
Answer: B. First-time SMF16s are approved regularly, but the application should show why the person can build the function from a standing start.
Read more: First-time SMF16 at a newly authorised firm
How Did You Do?
Count your correct answers out of 16.
- 13 or more: You know the role well. Try the MLRO quiz next.
- 8 to 12: A solid base. Our guide to compliance monitoring fills the detail.
- Fewer than 8: Start with what is SMF16?, then try again.
More Quizzes in the Series
Each quiz in the series tests a different part of the regime. Work through them in any order.
From Quiz to Appointment
If your firm needs a compliance officer, permanent, interim or fractional, we can help.
Related Services and Guides
From knowledge to appointment. Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate
Fractional Cover
SMF16 and SMF17, part of the week.
→ Fractional compliance officer → Fractional MLROFractional and interim SMF cover →
Compliance Leaders
Permanent compliance and MLRO hires.
→ CCO and head of compliance → Combined SMF16/17Compliance officer (SMF16) →
Resources
Guides, templates and pay data.
→ Knowledge Centre → Free guides and templatesAll resources →
Candidates
For current and future Senior Managers.
→ Live SMF jobs → Register as a candidateCandidate resources →
Every search is run by our specialist team, with Adrian Lawrence FCA overseeing each mandate
Frequently Asked Questions
Is this an official FCA test?
No. It is a learning aid written by SMF Capital.
Do I need a qualification to be SMF16?
There is no mandatory qualification, but the FCA assesses competence and capability. Relevant experience matters most, and qualifications such as the ICA diplomas help.
Can I use this for team training?
Yes. It works well as an induction or refresher exercise for compliance teams.
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.
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