Which SMFs Apply at Which Firm Tier?

Not every SMF designation applies to every regulated firm. The SMCR splits firms into three tiers — Limited Scope, Core and Enhanced — and a firm’s tier determines which SMF designations it needs to have in place at all. This is a designation-mapping reference specifically, not a general guide to what changes operationally at each tier; for that, our sister practice FD Capital has a dedicated guide to what changes for Limited Scope firms specifically, which we’d point you to for the implementation detail.

How Tier Is Determined

A firm’s tier is set by its regulatory permissions and the scale and nature of its activities, not by simple headcount or turnover alone. Enhanced tier applies to the largest and most complex firms — banks, larger insurers, and firms meeting specific size or activity thresholds set out in the FCA’s rules. Core tier is the default tier for most solo-regulated firms that don’t meet the Enhanced criteria. Limited Scope applies to a specific, narrower category of firms whose permissions are themselves limited — certain insurance intermediaries, sole traders, and a small number of other categories the FCA’s rules specify by name.

SMF Designations by Tier

Designation	Limited Scope	Core	Enhanced
SMF1 — Chief Executive	Not required	Required where applicable	Required
SMF2 — Chief Finance Function	Not required	Only if a separate CFO role exists	Required
SMF3 — Executive Director	Not applicable	Not applicable	Required where applicable
SMF4 — Chief Risk Officer	Not applicable	Not applicable	Required
SMF5 — Head of Internal Audit	Not applicable	Not applicable	Required
SMF9 — Chair of the Governing Body	Not required	Required where a board exists	Required
SMF10/11 — Risk/Audit Committee Chair	Not applicable	Not applicable	Required where committees exist
SMF12 — Remuneration Committee Chair	Not applicable	Not applicable	Required where a committee exists
SMF14 — Senior Independent Director	Not applicable	Not applicable	Required where applicable
SMF16 — Compliance Oversight	Required, reduced scope	Required	Required
SMF17 — MLRO	Required where financial crime risk exists	Required where applicable	Required
SMF18 — Other Overall Responsibility	Not applicable	Not applicable	Required where a gap exists
SMF24 — Chief Operations Function	Not applicable	Not applicable	Required

This table is a general guide rather than a substitute for checking a specific firm’s permissions against the FCA’s own rules — the precise application can vary based on a firm’s specific activities, and firms near a tier boundary should always confirm their exact requirements directly rather than relying on a general summary.

Why Limited Scope Firms Still Need to Take This Seriously

Limited Scope firms carry a genuinely lighter SMF burden than Core or Enhanced firms, but “lighter” doesn’t mean absent, and firms sometimes assume Limited Scope status exempts them from individual accountability considerations entirely. It doesn’t — a Limited Scope firm still needs individuals properly assessed as fit and proper for the functions it does require, even where the formal SMF list is shorter. FD Capital’s dedicated guide to Limited Scope firms covers what actually changes in practical, operational terms for firms in this category — we’d send you there for that detail rather than repeat it here.

What Happens When a Firm Moves Between Tiers

Firms grow, and growth can move a firm from Core to Enhanced tier as it crosses the relevant size or activity thresholds. This is one of the most consequential transitions a regulated firm goes through, because it typically means several new SMF designations become required almost simultaneously — SMF4, SMF5, and potentially SMF10, SMF11, SMF12 and SMF14 if the firm’s board structure expands accordingly. A firm that sees this transition coming — through its own growth planning rather than being caught by it — has real advantages in sequencing the necessary recruitment sensibly, rather than needing to fill several new SMF roles in an unplanned rush once the threshold is actually crossed.

Sequencing a tier transition

The firms that handle a Core-to-Enhanced transition most smoothly typically start planning the new SMF requirements six to twelve months before they expect to cross the threshold, using the same realistic timeline principles we set out in our guide to how long an SMF appointment actually takes. Given that several new designations may be required close together, running these searches with some coordination — rather than entirely independently — tends to produce a more coherent, better-integrated senior team than filling each role in isolation as the need becomes acute.

What This Means for Recruitment

Before specifying any SMF search, confirming the firm’s actual current tier — and whether a tier transition is on the horizon — should be one of the first questions a search brief answers. A firm that’s uncertain about its own tier, or that’s near a boundary without having thought through the implications, benefits from resolving that question before the search begins, since it directly determines which designations the firm actually needs to be recruiting for.