Senior Manager Functions (SMF) Explained: The Complete Guide to the SMCR

A Senior Manager Function is a role at an FCA or PRA-regulated firm that the regulators have designated as carrying personal, individual accountability for part of the firm’s business. The person holding it must be approved before they start, is named on the public FCA Register, and can be held personally responsible if something goes wrong in their area and they cannot show they acted reasonably. This guide explains how the Senior Managers and Certification Regime (SMCR) fits together, sets out every designation that matters in practice, and explains what the 2026 reforms change, and what they leave untouched, for firms recruiting into these roles.

What Is a Senior Manager Function?

Under the Financial Services and Markets Act 2000, certain roles at authorised firms are “controlled functions”. The most senior of these are the Senior Management Functions, universally shortened to SMFs. Each one is defined in the FCA Handbook, principally in SUP 10C, or, for banks, building societies and insurers, in the PRA Rulebook as well. The FCA’s own SMCR overview is the starting point for the official position.

Three things separate an SMF from an ordinary senior appointment. First, the individual needs regulatory approval before they can perform the role. Second, they must have a Statement of Responsibilities that sets out, in writing, exactly what they are accountable for. Third, they are subject to the Duty of Responsibility, which is what gives the regime its teeth.

The Duty of Responsibility

If a firm breaches a regulatory requirement in an area an SMF holder is responsible for, the FCA or PRA can take action against that individual personally, provided the regulator can show they did not take the steps a person in their position could reasonably have been expected to take to prevent the breach. The burden sits with the regulator. The original proposals for the regime included a “presumption of responsibility” that would have reversed it, but that was replaced by the Duty of Responsibility through the Bank of England and Financial Services Act 2016, before the regime came into force. The practical consequence is that what matters is evidence: a documented record of oversight, challenge and escalation is what allows an SMF holder to show they took reasonable steps. Our analysis of FCA enforcement trends looks at how this plays out.

The Three Parts of the SMCR

The SMCR was introduced for banks in 2016, extended to insurers in 2018, and applied to solo-regulated FCA firms from December 2019. It has three parts that work together.

The Senior Managers Regime covers the SMF holders themselves: pre-approval, Statements of Responsibilities, Prescribed Responsibilities and the Duty of Responsibility.

The Certification Regime covers people who are not SMFs but whose roles could cause significant harm to the firm or its customers. Rather than the regulator approving them, the firm itself must assess and certify them as fit and proper. Our guide to the Certification Regime covers this in detail, and it is the part of the regime most affected by the 2026 reforms.

The Conduct Rules set baseline standards of behaviour for almost everyone at a regulated firm, with an additional set of Senior Manager Conduct Rules for SMF holders. See our guide to the Conduct Rules.

Firm Tiers: Limited Scope, Core and Enhanced

For solo-regulated firms, how much of the regime applies depends on the firm’s tier. Limited Scope firms, such as some sole traders and firms whose regulated activity is ancillary to their main business, apply a lighter version, typically using the SMF29 Limited Scope function. Core firms, which make up the majority, apply the standard set of requirements. Enhanced firms, the largest and most complex, carry additional obligations: more SMFs, the Overall Responsibility requirement, a Responsibilities Map and formal handover procedures.

Enhanced status is triggered by size thresholds. The 2026 Phase 1 reforms raised several of them, including assets under management (from £50bn to £65bn), consumer credit lending revenue (from £100m to £130m) and intermediary regulated business revenue (from £35m to £45m). A firm near a threshold should check its position against the current rules. Our guide to which SMFs apply at which firm tier maps this designation by designation.

Dual-regulated firms, meaning banks, building societies and insurers, sit under both the PRA and the FCA. Many of their senior designations are PRA-designated, with the PRA approving candidates with the FCA’s consent.

The SMF Designations at a Glance

Not every designation applies to every firm, and dual-regulated firms have some PRA-specific functions not listed here. These are the designations firms most often recruit for.

The full index, with a summary of each guide, is on our SMF Designations page. If a role sits between two designations, our piece on SMF3 or SMF18 shows how to work it out before a search starts.

Statements of Responsibilities, Prescribed Responsibilities and the Responsibilities Map

Every SMF holder has a Statement of Responsibilities: a document submitted to the regulator describing what that individual is accountable for. It is the reference point against which the Duty of Responsibility is judged, so vague drafting helps nobody. An SMF holder with a loosely worded Statement will struggle to show which steps were reasonable for them to take.

The regulators also define Prescribed Responsibilities, specific responsibilities that must be allocated to an SMF holder, such as responsibility for the firm’s performance of its obligations under the SMCR itself, or for its policies on countering financial crime. The number that applies depends on the firm’s tier. The 2026 Phase 1 changes added guidance on when a Prescribed Responsibility can appropriately be split between individuals.

Enhanced firms must also maintain a Responsibilities Map, a single document showing how responsibilities are allocated across the whole firm and its governance arrangements. Our guide to the Responsibilities Map explains what it needs to show.

The Fit and Proper Test

Before approving an SMF, the regulator assesses the candidate against the criteria in the FCA’s FIT sourcebook: honesty, integrity and reputation; competence and capability; and financial soundness. The firm must carry out its own assessment first and confirm it is satisfied. That includes a criminal record check and regulatory references covering the previous six years, with serious misconduct disclosable whenever it occurred.

Competence is where most searches succeed or fail. The question is not whether a candidate is senior, but whether their experience fits this designation, in this sector, at this firm’s scale. Our guide to the fit and proper test in full sets out every sub-criterion.

How SMF Approval Works

Firms apply for approval using Form A, submitted through the FCA’s online system. Under section 61 of FSMA, the regulator must decide within three months of receiving a complete application, or within six months if the application is incomplete. In practice, a well-prepared application moves faster than a poorly prepared one, because every gap generates a follow-up question. Our piece on what goes wrong in Form A submissions covers the recurring causes of delay, and the other notification forms cover changes after approval.

The approval period follows the search itself, which is why boards so often underestimate the total timeline. Our guide to how long an SMF appointment actually takes sets out a realistic plan from brief to start date. Once approved, the individual appears on the FCA Register.

Temporary Cover: The 12-Week Rule

When an SMF holder leaves unexpectedly or is absent for a period that could not have been foreseen, a firm can appoint someone to cover the role temporarily without prior approval. The 2026 Phase 1 reforms changed how this works: from 24 April 2026, firms have 12 weeks to submit an application for the person covering, rather than having to obtain approval within that window. That removes one of the most common pressures in an unplanned vacancy. Our guide to the 12-week rule covers the conditions, and our fractional and interim SMF cover service exists for exactly this situation.

The 2026 SMCR Reforms

On 22 April 2026, the FCA (PS26/6), the PRA (PS12/26) and HM Treasury published the first phase of reforms to the SMCR, following consultations launched in July 2025. Most of the FCA’s changes took effect on 24 April 2026, with further changes on 10 July 2026 and changes linked to non-financial misconduct from 1 September 2026.

Phase 1 is largely a procedural clean-up: the 12-week rule change, higher Enhanced thresholds, the removal of overlapping certification roles, longer validity for criminal record checks before an SMF application, and additional guidance on SMF7, SMF18 and Prescribed Responsibilities. The larger change is legislative. HM Treasury has confirmed it will remove the Certification Regime from FSMA so that the regulators can build a more proportionate replacement in their own rulebooks, and will allow certain SMFs to become notification-only rather than requiring pre-approval. The legislation was included in the Financial Services and Markets Bill introduced in May 2026, and the regulators have said they will consult on Phase 2 changes once it progresses. The stated ambition is to cut the regime’s overall burden by half.

What the reforms do not change matters just as much. The SMF designations, Statements of Responsibilities, the Duty of Responsibility and the fit and proper standard all remain. If anything, stripping back the Certification Regime makes the Senior Manager Function more central to how firms evidence accountability, not less. A firm reviewing its structure in light of the reforms may find our governance and SMF structure review useful.

What This Means When You Recruit Into an SMF

The practical lessons are consistent across every designation. Identify the correct designation before the search begins, because the designation determines the fit and proper bar. Build the fit and proper assessment into the shortlist rather than leaving it to the Form A stage. Specify sector and firm-type experience precisely, since experience at a payments firm does not automatically translate to a wealth manager or an insurer. Plan against the realistic total timeline, including approval. And benchmark compensation properly: our guide to what SMF roles pay in 2026 sets out current figures.

Firms going through authorisation face all of this at once, often with several SMFs to fill together. Our guide to building an SMF team from scratch and our SMF authorisation support service cover that situation, and firms crossing into Enhanced tier can use our multi-SMF team build.