Payments, E-Money and the Senior Managers Regime

Payments and e-money firms occupy an unusual position. Most authorised payment institutions and electronic money institutions are authorised under the Payment Services Regulations 2017 and the Electronic Money Regulations 2011, not under the Financial Services and Markets Act. As a result, the Senior Managers and Certification Regime doesn’t formally apply to a firm that holds only those authorisations.

That doesn’t mean the firm’s senior people escape scrutiny. The FCA assesses the directors and persons responsible for managing a payments or e-money business for good repute and appropriate knowledge and experience, both at authorisation and whenever they change. The questions are much the same as under the fit and proper test, even if the labels differ.

The regime does apply where a payments or fintech business also holds FSMA permissions, for example to lend, arrange insurance or provide investment services. Many fintech groups run both frameworks side by side, and those firms need Senior Managers approved in the usual way. SMF Capital recruits for both situations, and we’ll tell you plainly which rules apply to your firm before the search begins.

Where the FCA Focuses

Financial Crime

Payments firms are subject to the Money Laundering Regulations 2017, which require a nominated officer to receive internal reports and report suspicious activity to the National Crime Agency. Financial crime is one of the FCA’s most consistent concerns in the sector, so the MLRO role carries real weight whether or not it’s an SMF17.

Safeguarding

Firms must protect customers’ funds through segregation or insurance arrangements. The FCA has strengthened its safeguarding expectations, including clear senior responsibility, accurate reconciliations and records that allow funds to be returned quickly if the firm fails.

Governance and Resourcing

The FCA looks at whether compliance and financial crime functions have the authority, independence and resources to do the job, particularly at fast-growing firms where volumes can outpace controls.

Agents and Distributors

Firms using agents or distributors must oversee them effectively. Weak oversight of third parties is a recurring supervisory issue.

How We Run Payments and Fintech SMF Searches

Every search starts from the Statement of Responsibilities the new Senior Manager will sign and any Prescribed Responsibilities they’ll carry. We build the specification around that accountability rather than a job title, then approach candidates directly and in confidence. Most of the strongest candidates aren’t actively looking, and many already hold approvals at competing firms.

Before anyone reaches your shortlist, we test them against the fit and proper test: prior approvals, regulatory history, directorships and financial soundness. We start regulatory references early, because late references are one of the most common causes of delay. For payments roles, we test direct experience of safeguarding, financial crime in payments and agent oversight, and confirm which regulatory framework applies to the role.

Adrian Lawrence FCA interviews every shortlisted candidate personally, and we stay involved until your new Senior Manager is approved and in post. For a realistic view of the stages, see how long an SMF appointment actually takes, and for the full service, our SMF recruitment services page.

The Senior Roles We Recruit

Heads of Compliance and MLROs

We place compliance leaders and MLROs with direct payments or e-money experience: safeguarding, card scheme rules, agent oversight, transaction monitoring and payment-specific regulatory returns. Where the firm also holds FSMA permissions, we recruit SMF16 and SMF17 holders with the same sector depth.

Fractional Compliance and MLRO Cover

Many smaller payments and e-money firms use a fractional compliance officer or MLRO until volumes justify a full-time hire. We recommend it only where the individual has enough time and genuine access to the business, because the FCA will want to understand the arrangement.

Chief Executives and Managing Directors

The FCA needs to accept the person running the business. We recruit leaders who combine fintech growth experience with credibility in regulatory engagement.

Finance and Safeguarding Leaders

Safeguarding reconciliations, capital calculations and regulatory returns need qualified finance people who understand payments. Our sister practice Accountancy Capital recruits safeguarding and regulatory reporting specialists below director level.

Senior Managers for Firms Adding FSMA Permissions

When a payments business starts lending, arranging insurance or offering investments, it will usually need Part 4A permissions, bringing the Senior Managers regime with them. Existing leaders may need approval for the first time. Our SMF authorisation support plans the team around the application.

Embedded Finance and Platform Businesses

A growing number of technology platforms offer payments or financial products to their own customers, either through their own authorisation or as agents or distributors of a regulated partner. The senior team needs to be clear which firm holds which regulatory responsibility, and how the partnership is overseen. Candidates with experience on both sides of these arrangements, as a regulated principal and as a platform partner, are particularly valuable, and we look for that experience specifically when the role calls for it.

Hiring Challenges in Payments and Fintech

• Specialist experience. Compliance experience from banks or investment firms transfers only partly. Safeguarding and payments-specific rules need direct experience or a clear plan to close the gap.
• Growth outpacing controls, leaving compliance and financial crime functions under-resourced.
• Fractional holders stretched too thin across many clients. We check candidates’ commitments carefully.
• Moving between frameworks as the firm adds permissions or joins a regulated group.

For a fuller explanation of how the rules differ, read our article on payments and e-money firms and the senior people the FCA assesses.

Other Sectors We Recruit For

SMF Capital recruits Senior Managers across the regulated market. Alongside this sector, we run dedicated searches for Wealth Managers & Advice Firms, Investment Managers & Hedge Funds, Consumer Credit Firms, Insurers, Brokers & MGAs, Banks & Building Societies and Crypto-Asset Firms. We also work with overseas firms opening UK branches and firms seeking FCA authorisation, in London, Birmingham, Bristol and across the UK.

Frequently Asked Questions

Does SMCR apply to our payments firm?

Not if the firm is authorised only under the Payment Services or Electronic Money Regulations. It does apply if the firm also holds FSMA permissions. We’ll confirm which applies before we start.

Do we still need an MLRO?

Yes. Payment and e-money firms are subject to the Money Laundering Regulations, which require a nominated officer and, where appropriate to the firm’s size and nature, a senior person responsible for compliance with them.

Can a fractional MLRO work for a payments firm?

Often, yes, particularly for smaller firms, provided the individual has enough time, genuine access to the business and isn’t stretched across too many clients.

Can you help a fintech preparing for authorisation?

Yes. See SMF authorisation support. We plan senior appointments around your submission date.