What Is SMF19?

A third country branch is a UK branch of a firm whose head office is outside the UK. The branch is not a separate legal entity; it is part of the overseas firm. That creates a particular challenge for regulators. The board and senior management who are ultimately responsible sit abroad, but the regulators need someone in the UK who is accountable for what the branch does.

SMF19 fills that gap. The Head of Third Country Branch is the individual with responsibility for the conduct of all activities of the UK branch. They hold a Senior Manager Function, need regulatory approval before starting, have a Statement of Responsibilities and are subject to the Senior Manager Conduct Rules. The function is set out in the PRA’s rules for third country branches in the PRA Rulebook, with the FCA’s equivalent requirements for branches in SUP 10C.

Who Needs an SMF19?

The branch-or-subsidiary distinction is one of the most important decisions an overseas group makes when entering the UK, and it determines the Senior Manager structure. A subsidiary needs a board, a chief executive, a chair and the other functions that apply to its firm type. A branch has a much lighter governance structure in the UK, but the regulators place correspondingly more weight on the SMF19 and the other branch Senior Managers. Our guides to SMF approval for overseas firms and group structures and PRA versus FCA dual regulation cover the wider picture.

What the SMF19 Is Accountable For

The Head of Third Country Branch is accountable for the conduct of all the branch’s activities. In practice, that usually includes:

• the branch’s business strategy and performance within the group’s overall direction;
• the branch’s compliance with UK regulatory requirements;
• the branch’s risk management and internal controls;
• the relationship with the PRA and FCA, including supervisory meetings and notifications;
• escalation to head office and reporting on the branch’s position;
• making sure the branch has the people and resources it needs; and
• any Prescribed Responsibilities allocated to the role.

The SMF19 doesn’t work alone. Branches usually need other approved individuals for specific functions, most commonly compliance oversight and money laundering reporting. Our guide to SMF16 and SMF17 covers those roles. The branch’s responsibilities map must show clearly how accountability is divided between the UK Senior Managers and the overseas head office.

The Head Office Relationship

The defining feature of SMF19 is the tension between local accountability and group control. Decisions affecting the branch are often taken at head office, by people who are not UK Senior Managers. The regulators expect the SMF19 to have enough authority and information to be genuinely accountable, which means:

Where group executives exercise significant influence over the branch, the regulators may also look at whether any of them need approval. Our guides to group SMF roles and SMF7 explain when that happens.

Approval: What the Regulators Look For

SMF19 is a PRA-designated function, so the PRA leads the approval and the FCA must consent. The regulators assess the candidate against the fit and proper test and focus closely on:

• knowledge of the UK regulatory regime, not just the home-country regime;
• experience of running a business of similar size and complexity;
• understanding of the branch’s risks and its dependence on head office;
• the authority the candidate will have in practice; and
• their availability in the UK, since the regulators expect the head of a UK branch to be present and accessible.

Interviews are common for SMF19 applications, especially for larger branches or where the candidate’s experience is mainly overseas. Candidates moving from head office should expect detailed questions on UK rules. Our guide to what goes wrong in Form A submissions covers the common pitfalls, and how long an SMF appointment takes gives realistic timings for dual-regulated approvals.

Recruiting an SMF19

The SMF19 candidate pool is narrow. Firms are looking for someone who can run a UK business, deal with the PRA and FCA with confidence, and work effectively within an overseas group. The main routes are:

Many overseas groups underestimate how important UK regulatory experience is for this role. A candidate who has previously held an SMF at a UK firm, ideally in the same sector, often makes the approval considerably smoother. We currently advertise SMF19 roles on our jobs page, including a Head of Third Country Branch mandate.

Frequently Asked Questions

What is SMF19?

SMF19 is the Head of Third Country Branch function: the Senior Manager responsible for the conduct of all activities of the UK branch of an overseas bank or insurer supervised by the PRA.

Do UK branches of EU firms need an SMF19?

Yes, where they are PRA-authorised branches. Since Brexit, EU firms are third country firms for UK regulatory purposes.

Does a UK subsidiary of an overseas group need an SMF19?

No. A UK subsidiary is a separate legal entity with its own board and the normal Senior Manager structure for its firm type.

Who approves an SMF19?

The PRA, with the FCA’s consent.

Can the SMF19 be based overseas?

The regulators expect the head of a UK branch to be present and accessible in the UK. An overseas-based SMF19 is likely to raise serious questions. See can a Senior Manager work remotely or from overseas?

Can you recruit an SMF19?

Yes. We recruit Heads of Third Country Branch and the branch control function holders who work alongside them.