A Senior Management Function (SMF) is a controlled function under the Senior Managers and Certification Regime (SM&CR) that gives the individual performing it significant influence over the conduct of a regulated firm’s affairs. Because of that influence, an SMF holder must be approved by the FCA or PRA under section 59 of FSMA 2000 before starting the role. The SMF is the building block of the Senior Managers Regime and the point at which personal regulatory accountability attaches.
Designated SMFs
The FCA and PRA designate a list of SMFs, each with a number and description. Common FCA-designated functions include SMF1 (Chief Executive), SMF3 (Executive Director), SMF16 (Compliance Oversight) and SMF17 (Money Laundering Reporting Officer). PRA-designated functions cover roles such as the Chief Risk function (SMF4) and Head of Internal Audit (SMF5). Which SMFs apply to a firm depends on its SM&CR category: enhanced firms have the broadest set, limited-scope firms far fewer.
Statements of Responsibilities and Prescribed Responsibilities
Each SMF holder must have a Statement of Responsibilities under section 60(2A) of FSMA, describing the areas they are accountable for. Firms must also allocate the Prescribed Responsibilities listed in SYSC 24, such as responsibility for the Certification Regime and for embedding the Conduct Rules, across their SMF holders, ensuring every core regulatory obligation has a named owner.
Approval and accountability
Firms apply for SMF approval using Form A, submitting the Statement of Responsibilities and the firm’s fit and proper assessment. Once approved, the SMF holder is subject to the duty of responsibility in section 66A(5) of FSMA, meaning they can face personal enforcement if a breach occurs in their area and they did not take reasonable steps to prevent it.