SMF14 Explained: What the FCA Actually Expects From a Senior Independent Director
Most companies have a Senior Independent Director, and most SIDs rarely hear from anyone outside the boardroom. At an FCA or PRA-regulated firm, that changes. SMF14 attaches regulatory accountability to the role, and the regulators may contact the SID directly when they have concerns about the chair or the board. This post explains which firms need an SMF14, what the role involves, what makes a strong candidate and why an SMF14 search is not an ordinary SID appointment.
Which Firms Need an SMF14
| Firm type | SMF14 position |
|---|---|
| Banks, building societies and insurers | Applies where the firm has a Senior Independent Director |
| Enhanced solo-regulated firms | Applies where the firm has a Senior Independent Director |
| Core and Limited Scope firms | Does not apply |
Enhanced thresholds rose from 10 July 2026, so some firms have moved out of scope and others are crossing into it. See which SMFs apply at which firm tier.
The SID Role, With a Regulatory Layer
The FCA defines SMF14 as the function of leading the assessment of the chair’s performance, and acting as an alternative contact for shareholders and others whose concerns have not been resolved through the chair, chief executive or finance director. That will be familiar to anyone who has sat on a listed board: it mirrors the SID role in the UK Corporate Governance Code.
What changes at a regulated firm is who else may use that channel. The FCA or PRA can engage directly with the SID when they have concerns about the chair’s effectiveness or about how the board is handling a regulatory issue. The SID becomes a potential route for the regulator as well as for shareholders. That is a different job, and it needs a different kind of candidate.
What an SMF14 Actually Does
Leads the chair’s performance evaluation
This is the core of the role. Regulators, especially the PRA, look at chair effectiveness closely and expect a substantive evaluation, not a box-ticking exercise. An evaluation led by a SID who isn’t independent of the chair, because of a long friendship or reluctance to gather frank views, fails the purpose of the function even if the paperwork looks complete. A good SID collects candid views from every director and the key executives, and gives the chair direct feedback.
Is credible to investors
For firms with institutional shareholders, the SID is often the only board contact outside the chair and CEO. Concerns about the chair, about pay, or about the board’s independence from a major shareholder tend to land with the SID first. The SID needs a profile investors will take seriously.
Provides an escalation route
When a concern can’t go through the chair or CEO, because it is about the chair, because the chair-CEO relationship has broken down, or because the chair is mishandling a crisis, the SID is the alternative. Directors and senior executives should know they can go to the SID, and the SID must act on what they hear. In some firms the SID also holds the whistleblowers’ champion role; see the whistleblowers’ champion.
Leads chair succession
A chair shouldn’t run the process to appoint their own successor. In most regulated firms that falls to the SID: briefing the search, overseeing assessment and managing the board’s decision. Prior experience of a chair succession is a useful marker in an SMF14 candidate. See SMF succession planning.
What Good Looks Like in the First Year
- Meets each director and key executive one to one, and agrees how they can raise concerns
- Leads a chair evaluation that gathers candid views and gives the chair specific feedback
- Meets major shareholders, where relevant, and reports their views to the board
- Agrees a chair succession timetable with the nomination committee
- Knows the firm’s supervisors and how they would make contact
A SID who does these things builds the trust that makes the escalation route work when it is needed.
Independence Has to Be Real
The regulators apply the usual independence tests to an SMF14: no material business relationship with the firm, no close connection to the chair or executives, and no role representing a major shareholder. The SID role adds one more question: does the candidate have any personal relationship with the chair that would make a frank evaluation, or an honest escalation about the chair, uncomfortable? A SID who is formally independent but personally close to the chair won’t do the job the designation exists for. We test this directly with referees, not only on the candidate’s declaration.
Who Fits the Brief
- Committee chairs stepping up: directors who already hold SMF10, SMF11 or SMF12 at a regulated firm bring approval experience and board credibility.
- Directors with investor experience: from SID or chair roles at listed companies, or from investment management where engaging boards on governance was part of the job.
- People who have dealt with regulators at board level: former chairs, non-executives or senior executives who have engaged directly with the FCA or PRA on difficult issues.
Combining SMF14 With a Committee Chair
At smaller Enhanced firms, the SID often also chairs a committee, most commonly audit or remuneration, because the board isn’t large enough for a separate director for each role. That is acceptable, but the brief must cover both roles, assessment must test both, and the person needs the time for both. Each function needs approval. The SID shouldn’t chair the nomination committee if they will lead chair succession, because the roles overlap. See NED time commitment.
Approval
SMF14 needs approval through a Form A, with a Statement of Responsibilities. The regulators assess independence and time commitment closely, and may interview candidates at larger firms. Approval typically takes three months from a complete application, so plan around it. See preparing for an approval interview.
What SMF14 Pays
SMF14 is usually paid as a supplement on top of the base non-executive fee: roughly £10,000 to £20,000 at smaller firms, £15,000 to £30,000 at mid-size firms and £25,000 to £40,000 at larger firms. Where the role is combined with a committee chair, the fee reflects both. Our salary guide has the base fees.
Scenario: A building society’s chair has been in post for eight years and the board wants a new SID to lead the chair’s evaluation and, eventually, succession. The obvious candidate is a long-standing director who is a close friend of the chair. We suggest testing independence in practice, not just on paper, and run a search that includes two external candidates with experience of chair succession at other mutuals. The board appoints one of them. Her first evaluation produces candid feedback from every director, and the board agrees an orderly succession plan with a timetable the chair supports.
Running the Search
Brief the role around its regulatory purpose: the chair evaluation, the escalation route and succession. Test candidates on how they have handled a difficult conversation with a chair, how they have gathered frank views, and how they would respond if the regulator called. Check relationships with the chair and executives carefully. We run SMF14 searches through our chair and committee chair recruitment service.
Board Recruitment
Chairs, SIDs and committee chairs. Every board search is overseen by Adrian Lawrence FCA
Board Roles
Chairs and SIDs.
→ Chair and committee chairs → Retained executive searchSMF9 explained →
Committee Chairs
Risk, audit, pay and nominations.
→ SMF10 and SMF11 → SMF13 explainedSMF12 explained →
Board Effectiveness
Structure and relationships.
→ Governance review → Multi-SMF team buildChair-CEO chemistry →
Board Tools
For nomination committees.
→ Board skills matrix template → Succession planning templateNon-executives at FCA firms →
Every board search is overseen by Adrian Lawrence FCA
Frequently Asked Questions
Which firms need an SMF14?
Banks, building societies, insurers and Enhanced solo-regulated firms that have a Senior Independent Director.
What does an SMF14 do?
Leads the chair’s performance evaluation, acts as an alternative contact for shareholders and others, provides an escalation route, and usually leads chair succession.
Can the regulator contact the SID directly?
Yes. The FCA or PRA may engage with the SID where they have concerns about the chair or the board.
Can the SID also chair a committee?
Yes, often at smaller firms, if they have the time and independence. Each function needs approval.
What does an SMF14 earn?
Typically a supplement of £10,000 to £40,000 on top of the base non-executive fee, depending on firm size.
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 oversees every SMF Capital search. View Adrian’s ICAEW profile.
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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.