The Authorisation Journey: Building an SMF Team From Scratch

A firm applying for FCA authorisation for the first time faces a genuinely different recruitment problem from an established regulated firm filling a single vacancy. There’s no existing SMF structure to slot a new hire into — the whole framework has to be built from nothing, in the right order, before the authorisation application itself can credibly go in. We work with a steady stream of authorising firms, particularly in fintech, payments and cryptoassets, and the same sequencing mistakes come up again and again.

Why Authorisation and Recruitment Are the Same Project, Not Two Separate Ones

The FCA doesn’t authorise a business plan in the abstract — it authorises a firm with named, individually assessed senior managers already identified and, in practice, largely in place before the application is submitted. This means a firm can’t sensibly treat “get authorised” and “build the senior team” as sequential projects, finishing one before starting the other. The two run together, and the sequencing of who is recruited when has a direct, material effect on how smoothly the authorisation process itself goes.

What Needs to Be in Place Before the Application Goes In

A credible, individually named Compliance Oversight function

The FCA expects to see a genuinely capable SMF16 candidate named in the application, not a placeholder or a vague description of the role the firm intends to fill eventually. Authorisation applications with a strong, specific SMF16 candidate already identified — ideally with direct experience of a comparable business model — consistently move through the process faster than applications where compliance leadership is still described in general terms.

MLRO identification where the business model requires it

For firms carrying meaningful financial crime risk — payments, e-money, cryptoasset businesses especially — the same principle applies to SMF17. A genuinely capable, specifically identified MLRO candidate, ideally with direct experience in a comparable sector’s financial crime risk profile, strengthens the application considerably compared with a generic assurance that AML processes will be built out post-authorisation.

A chair and board structure appropriate to the firm’s scale

Smaller authorising firms don’t always need the full non-executive board structure of an established Enhanced tier firm from day one, but the FCA does expect governance proportionate to the firm’s actual risk profile. Where a chair or independent non-executive presence is expected, identifying and, where possible, having that individual already engaged before submission strengthens the application’s credibility considerably.

Statements of Responsibilities drafted specifically, not generically

As we cover in our guide to Form A submissions, a generic or templated Statement of Responsibilities is a weak signal at any stage, and it’s a particularly weak signal in an authorisation application, where the FCA is assessing not just individual fitness but whether the firm’s overall governance structure has been genuinely thought through from first principles rather than assembled from a template.

The Sequencing Mistake We See Most Often

The single most common error is recruiting the wider executive and operational team first — building out the commercial side of the business — and treating SMF16, SMF17 and board governance as a late-stage step to complete once the rest of the team is in place and the business is closer to launch. This is exactly backwards from the FCA’s perspective. A firm that can demonstrate strong, specifically identified compliance and financial crime oversight early, even while other parts of the team are still being built out, presents a materially more credible application than one with an impressive commercial team and vague governance plans.

Fractional and Interim Cover During the Authorisation Period

Many authorising firms, particularly smaller ones, use fractional or interim SMF16/17 arrangements specifically through the authorisation period and the early months of trading, before scaling to a full-time hire once the business has genuinely proven its volume and complexity. This is often a genuinely sound approach — provided the fractional or interim individual has real, direct authorisation experience specifically, since guiding a firm through the authorisation process itself is a distinct skill from running an established compliance function day to day.

What This Means for Timing the Search

Firms planning an authorisation timeline should start their SMF16, SMF17 and any required board recruitment considerably earlier than they instinctively expect — well before the application itself is drafted, not once it’s nearly ready to submit. Given how much a strong, specifically identified senior team can strengthen an application’s credibility, and how much a vague or late-stage governance plan can weaken it, this is one of the highest-leverage sequencing decisions an authorising firm makes.