Offer Subject to FCA Approval: Managing the Gap Between Offer and Start
Every Senior Manager hire has a dangerous stretch in the middle. The candidate has accepted, the firm has submitted Form A, and then nothing visible happens for weeks or months while the regulator does its work. Offers fall over in that gap more often than at any other stage: counter-offers land, notice periods collide with approval dates, and candidates start to wonder whether the role will ever begin. This guide explains how to structure an offer that is conditional on FCA or PRA approval, what a candidate can and can’t do before approval, and the practical steps that keep a good hire on board until day one.
Why the Gap Exists
A person can’t perform a Senior Manager Function until the regulator has approved them. Section 59 of the Financial Services and Markets Act 2000 makes the approval requirement a legal one, not a formality, and the firm commits a breach if someone performs a controlled function without it. The firm applies on the candidate’s behalf using Form A, through FCA Connect, and the regulator then assesses fitness and propriety, may ask further questions, and may interview the candidate.
Under section 61 of FSMA, the regulator has a statutory period to decide an application, measured from when it has everything it needs. In practice, that means a well-prepared application for a straightforward role at a smaller firm can be approved comfortably within the statutory period, while a dual-regulated or high-impact role, or an application that triggers follow-up questions, can take much longer. We cover realistic timings in how long an SMF appointment actually takes.
The gap is not just regulatory time. It usually overlaps with the candidate’s notice period, which for senior people at regulated firms is commonly three to six months, and sometimes longer for chief executives and finance directors. The firm is managing two clocks at once, and only one of them is in its control.
Making the Offer Conditional: What the Contract Should Say
An offer for an SMF role should be expressly conditional on regulatory approval. That protects both sides: the firm isn’t committed to employing someone in a role they can’t legally perform, and the candidate knows from the outset what the condition is and how it will be satisfied. The wording is a matter for your employment lawyer, but the points it needs to cover are consistent.
| Clause | What it should cover | Why it matters |
|---|---|---|
| The condition | Employment in the SMF role is conditional on approval by the FCA (and PRA where relevant) for the named function | Makes clear the firm isn’t obliged to appoint to the role without approval |
| Co-operation | The candidate will provide complete and accurate information for Form A and co-operate with regulatory enquiries and any interview | Most delays come from incomplete information; this makes the obligation explicit |
| Disclosure | The candidate confirms they have disclosed everything relevant to fitness and propriety, including matters that may appear on a regulatory reference | Late disclosures are the most common reason an application stalls |
| Long-stop date | What happens if approval hasn’t been granted by a set date, such as a review point rather than automatic withdrawal | Avoids an open-ended commitment, but gives room for normal delays |
| Interim role | Whether the candidate will join in a non-SMF capacity before approval, and on what terms | Lets the candidate start without performing the function |
| Refusal or withdrawal | What happens if the application is refused or withdrawn | Both sides need certainty about the worst case |
| Other conditions | Regulatory references, criminal record checks, credit checks and qualifications | These sit alongside approval and should be satisfied early |
Two points are often missed. First, a conditional offer doesn’t mean the firm can wait until approval to finish its own checks. The firm must be satisfied the candidate is fit and proper before it applies, because Form A includes the firm’s own confirmation. Regulatory references under SYSC 22 should be requested as soon as the offer is accepted, not after submission. Our regulatory reference checklist sets out what to request. Second, the long-stop date should be realistic. Setting one at eight weeks for a role that routinely takes four months creates an exit route nobody intended to use.
What the Candidate Can Do Before Approval
Firms often assume the candidate can do nothing until approval. That’s not right. The restriction is on performing the Senior Manager Function, not on being employed by the firm. Many firms bring the candidate in early in a clearly non-SMF capacity, which shortens the effective handover and keeps the candidate engaged.
| Usually acceptable before approval | Not acceptable before approval |
|---|---|
| Joining as an employee in a defined role that is not a controlled function | Taking decisions that fall within the SMF’s Statement of Responsibilities |
| Induction, reading, meeting the team and understanding the business | Holding themselves out internally or externally as the SMF holder |
| Shadowing the outgoing holder or the person providing cover | Signing off regulatory returns or attestations as the responsible Senior Manager |
| Preparing a plan for the first 90 days | Chairing or voting at board or committee meetings in an SMF capacity |
| Attending meetings as an observer | Acting as the firm’s MLRO or nominated officer |
The line is about substance, not job title. Calling someone “Head of Compliance (designate)” doesn’t help if, in practice, they are running compliance oversight. Write down what the person is doing before approval, keep the existing holder or temporary cover clearly in charge, and record that the arrangement was considered. If you need someone to perform the function while the application is pending, the 12-week rule may allow temporary cover in limited circumstances, but it has strict conditions and isn’t a way to let the incoming candidate start early.
Scenario: A wealth manager offers an SMF16 role to a candidate with a three-month notice period. The firm submits Form A in week two, the regulator raises questions about a previous directorship in week seven, and the candidate’s employer makes a counter-offer in week nine. Because the firm had agreed a non-SMF start date, kept the candidate involved in the compliance plan and responded to the regulator’s questions within days, the candidate turns down the counter-offer, joins in a non-SMF role in month four and is approved shortly afterwards.
Lining Up Notice Periods and Approval Dates
The ideal is for approval to arrive close to the end of the candidate’s notice period. That rarely happens by accident. A few practical moves help.
- Submit as early as you can. Prepare Form A while the offer is being negotiated, so it can go in within days of acceptance. Our guide to what goes wrong in Form A submissions covers the common errors.
- Get the Statement of Responsibilities right first time. A vague or inconsistent SoR is a common source of follow-up questions. See writing a Statement of Responsibilities that works.
- Prepare the candidate for interview. For significant roles, the regulator may interview. The candidate should know the firm’s business model, risks and their own responsibilities in detail.
- Talk to the current employer early. Some employers will agree a shorter notice period or garden leave once they know the move is going ahead, particularly where the candidate’s own role needs a regulated handover.
- Plan for an approval that comes early. If approval arrives before the candidate can join, the firm can’t use it until the person starts. Make sure the existing holder or cover arrangement continues until then.
Where the incoming candidate is replacing someone who has already gone, the gap matters more. The firm needs cover for the function, the outgoing holder needs to submit a Form C, and responsibilities may need reallocating in the meantime. The other SMCR forms explains when each one applies.
Counter-Offers and How to Reduce the Risk
A candidate who has resigned and is waiting for approval is exposed. Their current employer knows they are leaving and has time to respond, and other firms may approach them too. Senior compliance and risk people are in short supply, which makes counter-offers common. The firms that hold on to their candidates tend to do the same few things.
- Agree a clear timeline at offer stage and update the candidate whenever anything changes
- Give the candidate a named contact for the regulatory process, not just HR
- Share relevant regulatory questions with the candidate promptly and answer them together
- Invite the candidate to meet the board, the chair or key colleagues before they join
- Consider a non-SMF start date so the candidate has a reason to leave on time
- Deal with buy-outs of deferred bonuses and notice period questions before resignation, not after
- Avoid any suggestion that the offer may be withdrawn because the process is slow
Buy-outs deserve a particular mention. A candidate leaving a firm with deferred variable pay may forfeit it, and under remuneration rules that pay may also be subject to malus and clawback. Structuring the replacement award early takes away one of the main levers a current employer has. We cover the detail in buy-outs, notice periods and clawback.
If the Regulator Has Concerns
Sometimes the regulator raises questions that suggest the application may not succeed. The firm then has a choice: answer the concerns, change the role or responsibilities, or withdraw the application. A refused application is a serious matter for the candidate, because it may need to be disclosed on future applications. A withdrawn application also has to be explained. The firm and candidate should take advice together, and the firm should keep a careful record of its reasoning.
Issues often arise from matters that should have come out earlier: a previous directorship of a failed firm, a gap in a regulatory reference, an unresolved complaint or a role that doesn’t match the candidate’s experience. Robust pre-offer checks and a candid conversation about anything that might come up are the best protection. The FIT sourcebook sets out what the regulator assesses, and our guide to the fitness and proper test explains it in plain terms.
A Checklist for the Offer-to-Approval Period
| When | Action | Owner |
|---|---|---|
| Before offer | Complete pre-offer checks; confirm the SMF designation; draft the Statement of Responsibilities | Firm and recruiter |
| Offer | Issue a conditional offer covering approval, disclosure, co-operation, long-stop date and interim role | Firm and employment lawyer |
| Week 1 | Request regulatory references; gather Form A information; agree the timeline with the candidate | Firm and candidate |
| Weeks 1 to 3 | Submit Form A and the updated responsibilities map | Firm (compliance or company secretary) |
| During review | Respond to regulator questions quickly; prepare the candidate for any interview; keep the candidate updated | Firm and candidate |
| Notice period | Agree a non-SMF start date if appropriate; maintain cover for the function | Firm |
| Approval | Confirm start in the SMF role; update the responsibilities map; complete handover | Firm and incoming holder |
SMF Recruitment and Approval
From shortlist to approval and first day. Every SMF search is led personally by Adrian Lawrence FCA
SMF Recruitment
Permanent Senior Manager searches.
→ SMF recruitment services
→ Compliance officer (SMF16)
Authorisation Support
Getting the application right.
→ SMF authorisation support
→ Timing and eligibility
Interim Cover
Covering the function while you wait.
→ Fractional and interim cover
→ The 12-week rule
Offers and Pay
Structuring a package that holds.
→ Buy-outs and notice periods
→ What SMF roles pay
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
Can a candidate start work before FCA approval?
They can join the firm, but they can’t perform the Senior Manager Function until approved. Many firms bring candidates in early in a defined non-SMF role, with the existing holder or temporary cover remaining responsible.
Should an SMF offer always be conditional on approval?
Yes. The offer should be expressly conditional on regulatory approval for the named function, with clear terms on disclosure, co-operation, a long-stop date and what happens if approval isn’t granted.
Who submits the application, the firm or the candidate?
The firm submits Form A through FCA Connect, and confirms it has assessed the candidate as fit and proper. The candidate provides much of the information and must make sure it is complete and accurate.
What happens if approval takes longer than the notice period?
The candidate can usually join in a non-SMF capacity, or the firm can delay the start date. Either way, someone else must continue to perform or cover the function until approval is granted.
Can the firm withdraw the offer if approval is refused?
That depends on the contract, which is why the conditional offer needs to say what happens on refusal or withdrawal. Take employment law advice on the wording.
Does SMF Capital help with the approval stage?
Yes. We prepare candidates for the process, help firms avoid common Form A problems and stay involved until the candidate starts. See our authorisation support.
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, from shortlist through to regulatory approval and the candidate’s first day. View Adrian’s ICAEW profile.
Hiring a Senior Manager?
We find SMF candidates who can be approved, then help you get them through the gap between offer and start. Tell us about your hire and 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.
