SMF Capital: New Services and Guides for Finance Leaders at Regulated Firms

If you are the CFO or finance director of an FCA or PRA-regulated firm, you will sooner or later be involved in hiring the people the regulator has to approve. Sometimes that is your own successor or deputy. More often it is a compliance officer, an MLRO or a risk lead, and the CFO is the person who signs off the budget, sits on the interview panel and has to explain the arrangement to the board.

SMF Capital is the part of The Capital Recruitment Group that specialises in those Senior Manager Function appointments. Over the last few weeks it has added a large set of new service pages and free guides. This page brings the most useful ones together, grouped by the questions finance leaders most often bring to us.

One Person as Compliance Officer and MLRO

The most common Senior Manager arrangement at smaller regulated firms is one person holding both the compliance oversight function (SMF16) and the money laundering reporting officer function (SMF17). It keeps headcount down and gives the firm a single senior point of contact on regulation and financial crime. It also concentrates a lot of personal accountability in one role, so it has to be set up properly.

SMF Capital now has a dedicated service page for combined compliance officer and MLRO recruitment, covering full-time, fractional and interim appointments. Alongside it sit several guides written for the people who make and fund the decision:

• What a combined compliance officer and MLRO costs: salaries, day rates and the cost of each working model, useful for budgeting.
• When to split a combined SMF16/17 role: the signs that one person can no longer cover both functions.
• Interviewing a combined compliance officer and MLRO: the questions that separate strong candidates from adequate ones.
• Compliance officer and MLRO for brokers and small advice firms: how the arrangement works at the smallest firms.

For the regulatory background, the guide to holding SMF16 and SMF17 together explains what the regulator expects of one person doing both.

When a Senior Manager Leaves Suddenly

A resignation from a compliance officer, MLRO or other Senior Manager can leave a regulated firm exposed within days. The firm has to notify the regulator, cover the function and plan a permanent replacement, often while the outgoing person is serving notice or has already left.

The new page on urgent SMF replacement sets out how SMF Capital finds interim and fractional cover quickly and what firms need to do in the first few weeks. Two related guides go into the detail:

• Your MLRO has resigned: a 30-day plan
• The 12-week rule: temporary SMF cover without full approval

For CFOs, the practical point is that interim cover is usually quicker and cheaper to arrange than firms expect, provided the call is made early rather than after the notice period has run out. SMF Capital’s interim MLRO and compliance officer page covers the options.

Fractional and Part-Time Senior Managers

Many smaller firms don’t need a full-time compliance officer or MLRO, but do need someone with the experience and standing the regulator expects. A fractional arrangement, where an approved Senior Manager works a set number of days a month, is now a mainstream answer. From the finance chair, it often gives the strongest leadership for the budget.

The SMF and compliance salary guide gives current salary and day-rate ranges, which is useful when deciding between a fractional and a full-time model.

Building a Financial Crime Team

As firms grow, financial crime work often outgrows a single MLRO. New posts on SMF Capital look at the roles that come next and how to size the team:

• Do you need a deputy MLRO?
• Head of financial crime or MLRO: which do you need?
• Hiring a sanctions lead
• Sizing the financial crime team at a payments or e-money firm
• Hiring a crypto MLRO

These are particularly relevant to CFOs at payments, e-money and cryptoasset firms, where financial crime headcount is often the fastest-growing cost in the control functions and the hardest to benchmark.

Compliance Monitoring

The longest new guide is Compliance Monitoring Explained. It covers what the rules require, how to build a risk-based programme, testing and sampling methods, how to report results to the board, an annual monitoring cycle and how to resource the work. For CFOs it matters for two reasons: monitoring often tests finance-led areas such as client money, safeguarding and regulatory returns, and the CFO usually decides how much is spent on it.

New Knowledge Centre Guides

SMF Capital’s Knowledge Centre has grown substantially. The newest guides that are most relevant to finance leaders include:

Financial crime

• The business-wide risk assessment
• Customer due diligence and enhanced due diligence
• Transaction monitoring
• Suspicious activity reports and the nominated officer
• REP-CRIM, the annual financial crime report
• The failure to prevent fraud offence, which matters to every large organisation, regulated or not

Finance-led regulatory areas

• Safeguarding for payments and e-money firms
• FCA threshold conditions and Part 4A permission, including the financial resources a firm must hold

Senior Managers and conduct

• SMCR reforms: what has changed for Senior Managers
• The duty of responsibility and reasonable steps
• SMCR background checks
• Vulnerable customers: what the FCA expects
• Financial promotions and the compliance officer’s role

For quick reference, the SMCR glossary explains the terms used across the regime, with a table of every Senior Manager Function.

Recruiting Across the UK

SMF Capital recruits nationally, from offices in London and the West Midlands, and has added a page on SMF recruitment in Leeds alongside its existing pages for Manchester, Birmingham, Bristol and Edinburgh. Leeds has a large and growing base of banks, building societies, insurers and payments firms, and demand for compliance and financial crime leaders there has risen steadily.

Questions CFOs Ask Before a Senior Manager Hire

Who pays for the time it takes to get approval?

Under the Senior Managers and Certification Regime, a new Senior Manager can’t perform the function until the regulator approves them, which for the FCA is up to three months from a complete application and can be longer. Firms usually either bring the person in before approval in a role that doesn’t need it, or use temporary cover under the 12-week rule. Either way, the cost of the overlap should be in the budget from the start.

Is fractional cover acceptable to the regulator?

Yes, provided the time commitment is proportionate to the firm’s size, risks and activities, and the person can show they have enough time and information to do the job. The regulator looks at the substance of the arrangement, not whether the person is an employee. A fractional Senior Manager carries the same personal accountability as a full-time one.

Can our CFO also hold another Senior Manager function?

Sometimes. At smaller firms the CFO may also hold the executive director function or take on other prescribed responsibilities. Combining the finance role with compliance oversight or the MLRO role is much less common, because it weakens the independence of the control functions, and firms considering it should expect questions. SMF Capital’s guide on holding more than one SMF covers the options.

How long does a search usually take?

Interim and fractional cover can often be arranged within days. A permanent compliance officer or MLRO search usually takes six to twelve weeks to an accepted offer, before notice periods and regulatory approval. Planning early is the single most effective way to avoid an expensive gap.

How CFO Capital and SMF Capital Fit Together

Both are part of The Capital Recruitment Group. CFO and finance director appointments, including the SMF2 chief finance function, sit with our finance practices, while SMF Capital handles the control-function and board Senior Manager roles that regulated firms need around the CFO: compliance officers, MLROs, risk leads, chairs and non-executive directors. For a CFO building or strengthening the senior team at a regulated firm, that means one conversation can cover the finance and regulatory appointments together.

If you are planning a Senior Manager hire, SMF Capital’s tell us about your SMF hire page is the quickest way to set out the role. Every search is led by Adrian Lawrence FCA, and every enquiry is answered the same working day.