For an experienced non-executive, an invitation to chair the board or a board committee at an FCA-regulated firm can look much like any other board appointment. It isn't. At a regulated firm, the chair and the chairs of the main committees are Senior Manager Functions under the SMCR. They need regulatory approval before they start, they carry written personal accountability, and they can face regulatory action as individuals. This article explains which non-executive roles are designated, what that accountability means in practice, and what to think about before accepting one.

Which Non-Executive Roles Are Senior Manager Functions?

Most non-executive directors at regulated firms are not Senior Manager Function holders. The designation attaches to specific leadership roles on the board.

SMF9, the Chair of the Governing Body, applies at most regulated firms above the Limited Scope tier. The chair leads the board, sets its agenda and culture, and is responsible for making sure it holds the executive to account. SMF Capital's guide to what the FCA expects from a regulated firm's chair covers the role in detail.

The committee chairs are designated at Enhanced solo-regulated firms and at dual-regulated banks, building societies and insurers. SMF10 chairs the risk committee and SMF11 the audit committee; together they oversee the firm's second and third lines of defence. The risk and audit committee chair designations are the ones most closely scrutinised by supervisors. SMF12 chairs the remuneration committee, a role that is often underestimated. The SMF12 remuneration committee chair is personally accountable for making sure pay does not reward risk-taking the firm should be discouraging. SMF13 chairs the nomination committee.

SMF14, the Senior Independent Director, acts as a sounding board for the chair, leads the chair's performance appraisal and provides a route for concerns that cannot go through the chair. Supervisors look to the Senior Independent Director's role as a check on concentrated power at the top of the board.

What Personal Accountability Means for a Non-Executive

Every Senior Manager Function holder has a Statement of Responsibilities setting out what they are accountable for, and is subject to the Duty of Responsibility. If the firm breaches a requirement in their area, the regulator can act against them personally where it can show they did not take reasonable steps to prevent it.

Non-executives sometimes assume collective board responsibility protects them. For a designated chair it offers limited comfort, because the regulator looks at how that individual led their board or committee. Did they make sure it received the right information? Did they challenge the executive when the information raised concerns? Did the minutes show real debate, or simply record approvals? A chair who can show a documented record of challenge and follow-up is in a very different position from one who presided over a committee that nodded things through.

Independence is the other expectation that comes up repeatedly. The regulators want chairs who are independent in behaviour, not just on paper. Long personal relationships with the chief executive, commercial ties to the firm or an unwillingness to have difficult conversations all undermine that. The relationship between the chair and the chief executive is where this tension shows most clearly.

The Approval Process

Before a designated non-executive can take up the role, the firm must apply for regulatory approval, usually on Form A. The firm must first assess the candidate as fit and proper against the FCA's criteria: honesty, integrity and reputation; competence and capability; and financial soundness. It must also obtain regulatory references covering the previous six years. The regulator then has up to three months to decide a complete application. It can, and for larger firms often does, interview chair candidates directly.

Taken together with the search itself and any notice period, the process takes considerably longer than an unregulated board appointment. Boards planning a chair succession should work from a realistic timeline for SMF board appointments rather than the timetable they would use elsewhere.

What the 2026 Reforms Change

The SMCR reforms announced in April 2026 do not remove the chair and committee chair designations, and the personal accountability that comes with them is unchanged. The first phase did raise several of the thresholds for Enhanced status, so some firms near the old limits may find they no longer need designated committee chairs. The government has also said it intends to allow certain Senior Manager Functions to move from pre-approval to a notification process, although which designations will be affected is not yet settled. Non-executives should expect the accountability to stay, even if the approval route becomes lighter.

Questions to Ask Before You Accept

Before accepting a designated role, an experienced non-executive should ask a few direct questions. What will my Statement of Responsibilities actually say? What management information will my committee receive, and how often? Is the relevant executive function, whether risk, audit, compliance or finance, properly resourced? What has the firm's recent supervisory history been? And is the fee proportionate to the personal exposure? SMF Capital's benchmarks on what SMF roles pay in 2026 include committee chair fees at regulated firms.

For firms, the same questions are a useful check on whether the role is being set up for success. A capable chair with poor information and an under-resourced executive team will struggle to show reasonable steps, however strong their CV. For the full list of designations and how they fit together, see the guide to every SMF designation from our specialist regulated practice, SMF Capital.

Appointing a Chair or Committee Chair at a Regulated Firm?

Call 0203 137 2496 or email recruitment@smfcapital.co.uk to discuss the appointment in confidence.

Adrian Lawrence FCA — Founder

Adrian is a Chartered Accountant and Fellow of the ICAEW with a practising certificate, and a former listed-company Finance Director. He founded FD Capital in 2018 and has since built Exec Capital, NED Capital, Accountancy Capital and SMF Capital, a specialist network for senior finance, executive, board and regulated appointments. View Adrian's ICAEW profile.