How Many Days a Week Does a Fractional MLRO or Compliance Officer Need?
Once a firm decides that a fractional MLRO or compliance officer is the right model, the next question is always the same: how many days? Too few, and the firm has an approved Senior Manager who can’t keep on top of the function, which is a risk for the firm and for the individual. Too many, and the firm pays for time it doesn’t need. There is no formula in the FCA’s rules. But there is a sensible way to work out the answer, and a sensible way to record it so the firm can explain its reasoning to the regulator. This guide sets out both.
Why the Number Matters
The FCA requires firms to have an adequately resourced compliance function and to give the MLRO sufficient resources and independence. Those requirements sit in SYSC 6.1 and SYSC 6.3. A fractional arrangement is not a problem in itself; the regulator accepts part-time Senior Managers. What it will test is whether the time the firm has bought is credible for the firm it is. That question can come up when the firm applies for the person’s approval, during supervisory contact, or after something has gone wrong, when the time commitment is one of the first things anyone looks at.
It matters to the individual too. A fractional compliance officer or MLRO holds the same personal accountability as a full-time one. If the days agreed are not enough to do the job properly, the Senior Manager is exposed, which is why experienced fractional candidates will often push back on an arrangement they think is too thin.
If you haven’t yet decided between fractional and full-time, start with our guide to fractional or full-time compliance officers. This article assumes the fractional decision is made and focuses on sizing it.
The Factors That Drive Time
The time a fractional MLRO or compliance officer needs is driven by the firm’s risks and activity, not by its headcount or revenue alone. The main factors are:
| Factor | Pushes time up when… | Pushes time down when… |
|---|---|---|
| Products and permissions | The firm has several permissions, complex or high-risk products, or retail customers | The firm has a narrow permission set and simple products |
| Customers | Customers include higher-risk jurisdictions, politically exposed persons or vulnerable customers | Customers are mainly UK, professional or low-risk |
| Volumes | Onboarding, transactions or alerts are high or growing fast | Volumes are low and stable |
| Complaints | Complaint volumes are significant, or themes are emerging | Complaints are rare and simple |
| Distribution | The firm uses appointed representatives, introducers or third-party distribution | The firm deals directly with a small client base |
| Support team | The Senior Manager has no analysts, deputy or outsourced support | Routine monitoring, screening or file checks are done by others |
| Regulatory change and scrutiny | The firm is implementing new rules, under remediation or in close supervisory contact | The firm is stable with no open regulatory issues |
| Combined roles | One person holds both SMF16 and SMF17 | The roles are held separately |
The support team is the factor firms most often underestimate. A fractional Senior Manager’s time should be spent on judgement, oversight, board reporting and regulatory contact. If they are also clearing alerts, checking files and screening customers themselves, the days needed rise sharply.
A Worked Sizing Approach
Rather than picking a number and defending it, build the figure up from the work. A practical approach:
- List the recurring activities. For a compliance officer: running the compliance monitoring plan, reviewing financial promotions, overseeing complaints, regulatory returns, policy reviews, training and board reporting. For an MLRO: reviewing escalated alerts and internal suspicion reports, SAR decisions, the business-wide risk assessment, policy and procedure updates, screening oversight, training and the annual MLRO report.
- Estimate the time for each. Use actual volumes where you have them, such as escalations per month, financial promotions per quarter or complaints per month, and a realistic time per item.
- Add the periodic work. Annual reports, risk assessment refreshes, board and committee meetings, and preparation for audits or regulatory visits, averaged across the year.
- Add regulatory change. Allow time for new rules, consultations and supervisory requests. In a busy year this can be significant.
- Add contingency. Urgent matters don’t arrive on agreed days. A buffer of 15 to 25 per cent is sensible for most firms.
- Test against comparable firms. Check the result against what similar firms use, and against the judgement of an experienced candidate.
An illustrative example
A small investment firm needs a combined compliance officer and MLRO. Its monitoring plan, financial promotions and complaints work comes to around four days a month. Escalated alerts, screening oversight and SAR decisions add about two days a month. Board reporting, policy reviews, training and the annual reports average another two days a month across the year. Regulatory change adds around a day a month. That is roughly nine days a month before contingency, or a little over two days a week once a buffer is added. The firm agrees two days a week with a defined arrangement for urgent matters, and reviews the figure after six months against actual activity. These figures are illustrative only; your firm’s will differ.
Typical Ranges
As a rough guide, and only as a starting point for the sizing exercise above, we see fractional arrangements in these ranges:
| Firm type | Typical fractional commitment |
|---|---|
| Small advice firm or IFA with simple products | Half a day to one day a week for compliance, often with outsourced file checks |
| Wealth manager or investment manager | One to two days a week, sometimes combining SMF16 and SMF17 |
| Consumer credit firm with retail customers | One to two days a week, higher during complaints or Consumer Duty work |
| Payments or e-money firm | Two to three days a week, especially for the MLRO |
| Cryptoasset firm | Two to three days a week or more, given the sector’s financial crime risk |
Our pages on fractional MLRO recruitment and part-time compliance officers for small firms explain how we scope and recruit these roles.
Documenting the Rationale for the FCA
Whatever figure the firm settles on, write down how it got there. A short paper to the board, recorded in the minutes, is enough for most small firms. It should cover:
- the firm’s business model, products, customers and volumes
- the activities the Senior Manager will carry out, and those done by others
- the time estimate and how it was built up
- the arrangements for urgent matters outside agreed days, including SAR decisions
- the individual’s other commitments and how conflicts are managed
- cover for holidays and absence
- when and how the time commitment will be reviewed
The same points belong in the contract with the individual. Our guide to fractional SMF agreements covers the contractual side, and the FCA’s SMCR pages set out the wider expectations on Senior Managers.
Scenario: A small authorised payment institution appoints a fractional MLRO for one day a week, based on its volumes at authorisation. Eighteen months later, merchant numbers have tripled. The MLRO is regularly working three days a week and invoicing for the extra, but the board has never revisited the arrangement, and alert backlogs are building. When the FCA asks for the firm’s financial crime governance documents, it has no current rationale for the time commitment. The firm reviews the arrangement, moves the MLRO to three days a week, appoints a financial crime analyst and records the new rationale in the board minutes.
Warning Signs the Time Isn’t Enough
Even a well-sized arrangement can become too thin as a firm grows. Boards should watch for:
- alert, case or complaint backlogs that persist from month to month;
- monitoring plan reviews that are deferred or reduced in scope;
- the Senior Manager regularly working beyond the agreed days;
- board reports that become shorter or less specific;
- slow responses to regulatory requests or internal escalations;
- new products, markets or distribution channels launched without a review of compliance time; and
- the individual taking on more clients elsewhere.
When several of these appear, it’s time to revisit the figure, add support, or consider a full-time appointment. If the gap is urgent, an interim MLRO or compliance officer can stabilise the function while the longer-term structure is decided.
Reviewing the Arrangement
A fractional time commitment should be reviewed at least annually, and whenever the business changes significantly. The review is straightforward if the firm records the Senior Manager’s actual time and activity: compare it with the original estimate, check the warning signs, and adjust. Many firms move from one to two days, or from two to three, as they grow, before reaching the point where a full-time appointment makes sense. When that point arrives, we can help recruit a permanent compliance officer or MLRO, or a deputy to sit alongside the fractional Senior Manager.
If you are starting from scratch, our fractional MLRO search begins with exactly this sizing conversation, and we’ll tell you honestly if we think the role needs more time than you’ve budgeted. The same applies to a part-time compliance officer appointment.
Fractional Compliance and MLRO Recruitment
The right time, the right person. Every SMF search is led personally by Adrian Lawrence FCA
Fractional Roles
Part-time senior cover.
→ Fractional MLRO
→ Part-time compliance officer
Interim Cover
When you need help now.
→ Interim MLRO and compliance
→ Urgent SMF replacement
Permanent Roles
When the firm outgrows fractional.
→ Compliance officer (SMF16)
→ MLRO (SMF17)
Contracts
Getting the terms right.
→ Fractional SMF agreements
→ When fractional works
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
Is there a minimum number of days the FCA requires?
No. The FCA doesn’t set a minimum. It expects the time commitment to be adequate for the firm’s size, risks and activities, and the firm should be able to explain how it reached its figure.
Does combining SMF16 and SMF17 double the time needed?
Not usually, because some work overlaps, such as board reporting and policy governance. But it does add time, particularly for firms with significant financial crime risk.
What happens on days the fractional Senior Manager isn’t working?
The arrangement should define how urgent matters are handled, such as remote availability for SAR decisions and a named deputy for routine escalations.
How often should we review the time commitment?
At least annually, and whenever the business changes significantly, for example after a new product launch or a big increase in customers.
Can you help us size the role?
Yes. Sizing the time commitment is the first step in every fractional search we run.
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.
Sizing a Fractional Role?
Tell us about your firm, its products and volumes. We’ll help you work out a realistic time commitment and find the right fractional MLRO or compliance officer. We’ll come back to you 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.
