Why Interim Cover Matters for SMF16 and SMF17

Compliance oversight (SMF16) and money laundering reporting (SMF17) are the two Senior Manager Functions that almost every Core and Enhanced firm must fill, and they are the two the FCA notices first when they are vacant. A gap in either role creates real risks:

• suspicious activity decisions are delayed or made by people without the authority to make them;
• compliance monitoring stops, and issues build up unnoticed;
• regulatory returns, attestations and the annual MLRO report are missed or rushed;
• the board loses its main source of assurance on conduct and financial crime; and
• the firm has to explain to its supervisor who is accountable in the meantime.

Firms must notify the FCA when a Senior Manager stops performing their function, and the regulator will expect a credible plan for cover. Our guide to what to do when your MLRO resigns sets out the first 30 days, and our guide to the SMCR notification forms explains the filings.

When Firms Use an Interim SMF16 or SMF17

Temporary Cover and the 12-Week Rule

A key question with any interim appointment is whether the person needs FCA approval. The FCA’s rules allow a firm to arrange temporary cover for a Senior Manager Function without approval in limited circumstances, for a period of up to 12 weeks in a consecutive 12-month period, where the absence is temporary or reasonably unforeseen. Beyond that, the interim must be approved. Our guide to the 12-week rule explains when it applies, and the rules themselves are in the FCA’s SUP 10C.3.

In practice, most interim compliance and MLRO assignments run for longer than 12 weeks, because a permanent search, notice period and approval take months. We therefore recommend that firms plan for approval from the start: choose an interim who is approvable, prepare the application early and use the 12-week allowance to bridge the gap while the application is considered. Interims who already hold, or have recently held, SMF16 or SMF17 approval at another firm are often the quickest to approve.

How We Recruit Interim Compliance Officers and MLROs

• Same-day brief. We take the brief quickly, including why the role is vacant, the state of the function and any supervisory concerns.
• Immediately available candidates. We approach experienced interim SMF16s and SMF17s who are available now or within weeks, rather than candidates on long notice periods.
• Match the situation. A steady-state cover assignment needs a different person from a remediation lead. We match experience to the job that actually needs doing.
• Approvability first. Every candidate is checked against the fit and proper test, with previous approvals and references confirmed, before you see them.
• Fast shortlist. For interim roles we typically shortlist within days rather than weeks. Adrian Lawrence FCA interviews every shortlisted candidate personally.
• Bridge to permanent. We can run the permanent search alongside the interim assignment, so the handover is planned rather than rushed.

What Strong Interim Candidates Bring

Interim, Fractional or Permanent?

Interim and fractional appointments are often confused. An interim fills a gap for a defined period, usually full-time or close to it, with a clear end point. A fractional appointee is a long-term, part-time solution. Some firms start with an interim, then decide that a fractional MLRO or part-time compliance officer is the right permanent model. Others use the interim period to define a full-time role and recruit a permanent compliance officer or MLRO. We give an honest view on which fits, and our guide to when interim and fractional appointments work sets out the trade-offs.

Getting the Most From an Interim

An interim compliance officer or MLRO adds most value when the firm is clear about what it wants from the assignment. Before the interim starts, agree:

• the scope: steady-state cover, specific remediation, or both;
• the priorities for the first 30 days, such as outstanding SAR decisions, monitoring backlogs or regulatory deadlines;
• reporting lines to the chief executive and the board, and access to the audit or risk committee;
• the resources available, including the team, systems and any outsourced providers; and
• the expected end point and handover arrangements.

Our guide to the first 90 days for a new MLRO or compliance officer is a useful framework for interims as well as permanent appointees.

Day Rates and Terms

Interim SMF16 and SMF17 roles are usually paid on a day rate, reflecting the candidate’s seniority, the complexity of the assignment and whether the role combines both functions. Remediation and s166-related assignments typically command higher rates. Our SMF and compliance salary guide gives current benchmarks. Contracts should cover minimum notice on both sides, because an interim Senior Manager who leaves abruptly creates exactly the problem the firm hired them to solve.

Frequently Asked Questions

Does an interim compliance officer or MLRO need FCA approval?

If they cover the function for more than 12 weeks in a 12-month period, or the temporary cover rules don’t apply, yes. Most firms should plan for approval from the start.

How quickly can you find an interim?

For interim SMF16 and SMF17 roles we usually shortlist within days, because we focus on candidates who are available now.

Can one interim cover both SMF16 and SMF17?

Yes, at many firms, provided they have the experience and time to do both properly.

Can the interim become permanent?

Sometimes. If both sides want it, an interim can move into a permanent or fractional role. We discuss this with you at the outset so expectations are clear.

Do you also recruit the permanent successor?

Yes. Many clients ask us to run the permanent search while the interim is in place.