The Problem With Most SMF Succession Plans

Many succession plans name an internal successor for the chief executive and stop there. They rarely cover the compliance officer, the MLRO or the chief risk officer, even though losing one of those can be just as disruptive. They also tend to assume the successor can start immediately, ignoring the approval process, notice periods and the time it takes an internal candidate to become ready.

A plan that works on the day needs to answer three questions for every Senior Manager Function: who covers tomorrow, who succeeds in the medium term, and how long it takes to get them approved.

The Template

Complete one row for each Senior Manager Function in your firm:

Fill in your own names and timings. The value comes from the discussion the board has while completing it: which functions have no realistic cover, which internal successors aren’t as ready as assumed, and where the firm would depend on an interim.

Column by Column

Emergency Cover

Who performs the function from the day the current holder leaves unexpectedly? The 12-week rule allows a person to cover an unexpected vacancy without prior approval. Since the April 2026 reforms, the firm must submit an approval application within those 12 weeks if the person covering is to continue. The rule is for unforeseen situations. A planned departure should be covered by an approved successor or an application submitted in time.

Internal Successor and Readiness

Be honest about readiness. “Ready now” means the person could be approved today on their existing experience. “Ready in 12 months” means there’s a plan to close specific gaps. Our post on hiring a first-time Senior Manager explains how to build the evidence the regulator will want.

External Search Lead Time

Include the search itself, the successful candidate’s notice period and the regulator’s assessment, which can take up to three months once a complete application is submitted. For senior roles and dual-regulated firms, add time for interviews. Our SMF appointment timeline sets out the stages.

Interim Option

For many control functions, an interim Senior Manager is the realistic bridge. Knowing in advance how you’d find one, and roughly what it would cost, turns a crisis into a process. Interim day rates are in our SMF and compliance salary guide.

Board-Level Succession

Board Senior Manager Functions need planning too. Chairs and committee chairs usually serve fixed terms, so their departures are predictable, yet many boards start searching too late. Keep a board skills matrix, note when each non-executive’s term ends, and start searches at least nine to twelve months ahead for a chair or committee chair. For dual-regulated firms, remember that the PRA considers the board’s collective suitability under the PRA Rulebook, so each appointment needs to fit the whole board. See chair and committee chair recruitment.

Reducing Single Points of Failure

At smaller firms, one person often holds several functions, such as a chief executive who is also the executive director responsible for compliance, or a combined compliance officer and MLRO. Their departure leaves several gaps at once. Practical steps include:

• developing a deputy for each function, even if part-time
• documenting how each function operates, so a successor or interim can pick it up
• identifying in advance an interim or fractional Senior Manager who could step in
• considering whether combined roles should be separated as the firm grows

A governance and SMF structure review can identify where these risks sit.

Succession After a Transaction

Acquisitions, investment rounds and group restructures often trigger several Senior Manager changes at once. Founders sell and step back, acquirers bring in their own executives, and control function holders sometimes choose to leave. A succession plan written before a transaction may be out of date the day it completes. Boards going through a deal should revisit the plan as part of integration planning, identify which Senior Managers are likely to change, and line up approvals so they run in parallel with the transaction timetable rather than after it.

Keeping the Plan Confidential

Succession plans contain sensitive information: views on individuals’ readiness, possible departures and contingency arrangements. Keep the detailed plan within the board or nominations committee, and share only what each Senior Manager needs to know about their own cover and development. When a plan is activated, discretion matters just as much. Searches for successors, especially for a chief executive or chair, are usually run confidentially until the board is ready to announce.

Linking Succession to Development

The most effective plans turn readiness gaps into development plans. If a deputy compliance officer needs board exposure before they’re ready for SMF16, schedule it. If a head of risk needs prudential experience before taking on SMF4, give them ownership of part of the ICARA. Documented development makes the eventual approval application far stronger, because it shows the regulator a planned progression rather than a last-minute promotion.

When Succession Meets Recruitment

Succession planning and recruitment work best together. An external search can benchmark internal successors against the market, so the board knows whether its internal candidate is genuinely the best option. And a relationship with a specialist recruiter means an interim can be in place within days rather than weeks. For chief executive and C-suite succession at larger firms, our sister practice Exec Capital runs FCA-regulated executive search.

Frequently Asked Questions

How often should the board review the succession plan?

At least annually, and after any significant change such as a departure, restructure or move to Enhanced status.

Can the 12-week rule cover a planned retirement?

It’s designed for unexpected or temporary absences. A planned departure should be covered by an approved successor or an application submitted in good time.

Should every function have an internal successor?

Ideally, but at smaller firms it isn’t always realistic. In that case, identify an interim option and a realistic external timeline.