SMF9 Explained: What the FCA’s Chair Function Actually Requires

At SMF Capital we spend a good deal of our time explaining SMF9 to boards and nominations committees who are used to appointing chairs under ordinary company law and governance code principles, and who are encountering the SMCR overlay for the first time. This post sets out what SMF9 is, why it differs so sharply from a standard chair appointment, and what a search process for the role should actually be testing for.

What SMF9 Is, and Why It Exists

The Senior Managers and Certification Regime was introduced to fix a specific problem: after the 2008 financial crisis, regulators found it extraordinarily difficult to hold any individual accountable for governance failures inside large regulated firms. Responsibility was diffused across committees, and no single person could be shown to have failed in a specific, provable way. SMF9 — Chair of the Governing Body — is one of the regime’s answers to that problem. It attaches personal, provable accountability to the individual who chairs the board.

That accountability is not symbolic. Under the SMCR’s Duty of Responsibility, an SMF9 holder can be investigated by the FCA (and, for dual-regulated firms, the PRA) if the board’s governance is found to have failed and the chair cannot demonstrate that they took reasonable steps to prevent it. This sits on top of, and in some respects goes further than, the ordinary director’s duties under the Companies Act. A chair who would pass muster under general corporate governance principles may still fall short of what SMF9 specifically requires.

The PRA’s Additional Expectations for Dual-Regulated Firms

For banks, insurers, building societies and larger investment firms regulated by both the FCA and the PRA, the bar for SMF9 is higher again. The PRA has been explicit, through supervisory statements and correspondence with boards, about three things it expects from a chair:

Behavioural, not just formal, independence

A chair can meet every formal independence criterion on paper and still fail this test if they defer routinely to the chief executive, avoid difficult challenge, or maintain relationships with major shareholders that quietly compromise their objectivity. The PRA looks past the box-ticking and asks whether the chair actually behaves independently in the room.

A working relationship with the supervisor

The PRA maintains a direct supervisory relationship with the chairs of the firms it regulates. A chair who delegates all contact with the regulator to the chief executive or finance director is not fulfilling the SMF9 function as the PRA expects it to be fulfilled — the chair is meant to engage substantively, not stand behind management.

Demonstrable board effectiveness

The PRA’s supervisory assessment of a firm’s governance includes a direct view on whether the chair is producing an effective, challenging board. Boards that rubber-stamp management’s proposals attract supervisory attention, and that attention is directed specifically at the chair.

Which Firms Need an SMF9

SMF9 applies to Core and Enhanced firms that have a chair of their governing body, and to dual-regulated firms. Many small Core firms have no separate chair, in which case the function does not arise. Where a firm does have a chair, that person must be approved before taking up the role. Our guide to which SMFs apply at which firm tier sets out the position, and the rules are in the FCA Handbook at SUP 10C.

Prescribed Responsibilities Usually Held by the Chair

At Enhanced and dual-regulated firms, the chair is typically allocated Prescribed Responsibilities covering the board’s own processes:

Our guide to Prescribed Responsibilities explains how they are allocated, and the whistleblowers’ champion covers that role.

What the SMF9 Chair Is Actually Responsible For

Strip away the regulatory language and the SMF9 chair’s job has four practical dimensions:

Setting the tone at board level. Chairing meetings well is table stakes. The harder job is building a culture where directors genuinely challenge management rather than simply attending to observe.

Managing the CEO relationship. This is the single most consequential relationship in the firm’s governance, and for a regulated firm it has a regulatory dimension — the chair must be satisfied the CEO is running the business within its regulatory obligations, and must be prepared to escalate to the regulator if that assurance breaks down.

Direct regulatory engagement. Attending supervisory meetings, responding to information requests, and being a credible, known quantity to the firm’s FCA and PRA supervisors.

Oversight of the firm’s own SMCR framework. Making sure every other SMF designation in the firm is correctly notified, that fit and proper assessments are actually being conducted annually, and that the SMCR paperwork reflects reality rather than a compliance exercise conducted once a year.

Who Actually Fits the SMF9 Profile

In our experience, three candidate profiles consistently clear the bar for SMF9 appointments:

Sitting or former chairs of comparable regulated firms. Prior experience of chairing a board of similar scale and regulatory complexity — with direct experience of PRA or FCA supervisory engagement — creates an immediate credibility that a generalist governance candidate, however accomplished, cannot match on day one.

Former senior regulators. Individuals who have held senior positions at the FCA, PRA or Bank of England, or at a comparable overseas regulator, bring a first-hand understanding of what supervisors are actually looking for, along with relationships that carry real practical value during the Form A process and beyond.

Committee chairs stepping up. A director who already holds SMF10 or SMF11 at a regulated firm has already been through SMCR approval and understands the regulatory environment from inside the boardroom — a natural and lower-risk step to the chair role.

Time Commitment

A regulated firm’s chair needs considerably more time than a typical non-executive. Beyond board meetings, the chair prepares agendas with the chief executive and company secretary, meets supervisors, leads board evaluations, and deals with issues between meetings. At a small FCA solo-regulated firm that may be two to three days a month; at an Enhanced firm or a bank, often two days a week or more. The FCA will ask whether the candidate’s other commitments leave enough time, so portfolio candidates should be realistic. See NED time commitment and overboarding.

Why the Search Process Matters More Than the Job Description

The single most common mistake we see is a nominations committee treating an SMF9 search as an ordinary chair search with an extra form to fill in at the end. The Form A submission to the FCA — and to the PRA where relevant — requires a documented, evidenced assessment of the candidate’s fitness and propriety across honesty and integrity, competence and capability, and financial soundness. That assessment is far stronger, and far faster to clear, when the search itself has already tested for exactly those things, rather than treating regulatory approval as a formality to be handled after an appointment decision has effectively been made.

Fee levels for SMF9 appointments vary enormously with the size and systemic importance of the firm — from the tens of thousands at smaller FCA solo-regulated firms up to several hundred thousand pounds a year at major banks and systemically important institutions — but in every case the fee reflects the regulatory accountability premium attached to the role, not simply the time commitment.

We recruit chairs and committee chairs through our chair and committee chair recruitment service, and the chair’s relationship with the chief executive is covered in the chair and CEO chemistry problem. Where several board roles are being filled together, see our multi-SMF team build.

Frequently Asked Questions

Does every regulated firm need an SMF9?

No. It applies where the firm has a chair of its governing body. Many small Core firms have no separate chair.

Does the chair need FCA approval?

Yes. SMF9 is a Senior Manager Function, so the chair must be approved before taking up the role. At dual-regulated firms the PRA approves with the FCA’s consent.

Can a former chief executive become chair?

It is possible but needs careful handling, because independence will be questioned. The board should be able to explain why it is the right choice.

How long does an SMF9 search take?

Typically three to five months to an accepted offer, then the approval period.