FCA SMF Functions: The Senior Management Functions for Small Firms

Under the Senior Managers and Certification Regime (SMCR), the most senior people at a regulated firm hold Senior Management Functions — SMFs. These are the roles the FCA has decided carry enough responsibility that the person performing them needs individual FCA approval and can be held personally accountable. For a small firm, knowing which SMFs apply and who must hold them is one of the foundations of getting SMCR right.

The full list of SMFs is long, but most of it is aimed at banks, insurers and large investment firms. A small solo-regulated firm typically needs only a handful. This guide sets out the SMFs that matter for small firms, explains who has to hold them, and clarifies the frequent confusion between senior management functions and certification functions.

What is a Senior Management Function?

A Senior Management Function is a controlled function under the Financial Services and Markets Act — a role a person cannot perform without FCA approval. The person applies for approval on Form A, submitted with a Statement of Responsibilities, and once approved they appear on the Financial Services Register as an approved person.

Every SMF holder is subject to the conduct rules (including the Senior Manager Conduct Rules), must have a clear Statement of Responsibilities, and may hold Prescribed Responsibilities — specific accountabilities the FCA requires to be allocated to a named Senior Manager.

The SMFs that apply to small solo-regulated firms

The FCA's guide for solo-regulated firms sets out which functions apply. The common ones for small firms are:

SMF	Function	Who holds it
SMF1	Chief Executive	The most senior executive responsible for the firm's business
SMF3	Executive Director	Directors who perform executive roles
SMF9	Chair	The chair of the governing body, where the firm has one
SMF16	Compliance Oversight	The person responsible for the compliance function
SMF17	Money Laundering Reporting Officer (MLRO)	The nominated officer for financial crime
SMF27	Partner	Partners in a firm structured as a partnership or LLP
SMF29	Limited Scope Function	Applies to Limited Scope SMCR firms

Two functions in that list — SMF16 (Compliance Oversight) and SMF17 (MLRO) — are required for most firms and are worth calling out. The FCA's guide notes that some types of firm "must have a Compliance Oversight" function in place. Many small firms will have the same person hold both, which is permitted.

There is also SMF18 – Other Overall Responsibility, which the guide describes as an SMF that "applies where a senior executive is the most senior person responsible for an area of the firm's business but they don't perform any other SMF." Most small firms will not need SMF18, because the people ultimately responsible for what the firm does are already captured by the other functions — but it exists to catch the case where a significant area of responsibility would otherwise sit with someone holding no SMF.

Core, Enhanced and Limited Scope tiers

Which SMFs apply depends on the firm's SMCR tier:

Limited Scope firms have the narrowest set — often just SMF29 plus, where relevant, SMF16 and SMF17.
Core firms — the tier most small advisory and intermediary firms fall into — hold the standard set: typically SMF1, SMF3 (where applicable), SMF9 (if there is a board chair), SMF16 and SMF17.
Enhanced firms are the largest and most complex; they hold a much wider set of SMFs and additional Prescribed Responsibilities. Very few small firms are Enhanced.

It is possible — and common at small firms — for one person to hold several SMFs. The FCA's guide gives the example that an SMF3 Executive Director "may also hold the SMF17 – Money Laundering Reporting Officer function." A sole director of a small IFA might hold SMF1, SMF3, SMF16 and SMF17 all at once. Each function must still be named in the approval application and covered in the Statement of Responsibilities.

SMFs are not the same as certification functions

This is the distinction small firms most often get wrong. The SMCR has three tiers of people:

Senior Managers — hold SMFs, need FCA approval, appear on the Register.
Certified staff — hold certification functions, do not need FCA approval, but must be certified by the firm as fit and proper. They appear on the FCA Directory rather than being approved persons.
Conduct rules staff — almost everyone else, subject to the conduct rules but neither approved nor certified.

Certification functions are a different list from SMFs. They cover roles that can cause significant harm to customers or the firm but do not sit at the top of the governance structure — for example the Client Dealing function (advising retail customers), the Significant Management function (running a significant business unit), Functions requiring qualifications, and the CASS Oversight function. A crucial point of confusion: the systems-and-controls roles (finance, risk and internal audit) are Senior Management Functions at firms where they apply, not certification functions — though at Core and Limited Scope firms these functions are not separately designated SMFs.

If you need the detail on who counts as certified staff and what data goes on the Directory, our FCA Directory Persons guide covers it. The short version: SMF = approved person on the Register; certification function = certified person on the Directory.

How to map SMFs at your firm

For a small firm, the practical exercise is:

Identify your SMCR tier (Limited Scope, Core, or Enhanced). Most small firms are Core or Limited Scope.
List the SMFs your tier requires — as a minimum, most firms need someone approved for SMF16 (Compliance Oversight) and SMF17 (MLRO), plus the governance SMFs (SMF1/SMF3/SMF9/SMF27 as applicable to your structure).
Allocate each SMF to a named individual, checking that no required function is left unheld.
Allocate the Prescribed Responsibilities among your Senior Managers.
Confirm each SMF holder is approved — on Form A, with a current Statement of Responsibilities.

Mapping this cleanly matters more than ever with the PS25/23 non-financial misconduct rules taking effect on 1 September 2026 — the FCA will expect small firms to have their Senior Manager accountabilities clearly allocated and evidenced.

Common mistakes

1. Confusing SMFs with certification functions. SMF holders need FCA approval; certified staff do not. Treating a certification function as an SMF (or vice versa) leads to the wrong approvals and the wrong Directory entries.

2. Leaving a required SMF unheld. If your tier requires SMF16 and no one is approved for it, the firm has a gap the FCA will treat seriously.

3. Assuming SMF18 is needed. Most small firms do not need Other Overall Responsibility — the required functions already capture the people who run the firm.

4. Not keeping Statements of Responsibilities current. An SMF holder whose responsibilities have changed needs a resubmitted SoR.

Summary

SMFs are the top-tier SMCR roles requiring individual FCA approval; small firms typically need only a handful (SMF1, SMF3, SMF9, SMF16, SMF17, and SMF27/SMF29 by structure).
SMF16 (Compliance Oversight) and SMF17 (MLRO) are required for most firms; one person can hold several SMFs.
Which SMFs apply depends on the firm's tier — most small firms are Core or Limited Scope.
SMFs are not certification functions: SMF holders are approved persons on the Register; certified staff appear on the Directory and do not need FCA approval.
Map your SMFs to named individuals, allocate Prescribed Responsibilities, and keep Statements of Responsibilities current.

Last reviewed: 18 August 2026. This guide explains the FCA senior management functions for small regulated firms. It is general information about the Senior Managers and Certification Regime, not regulatory or legal advice, and it does not describe a ConductLog product feature — ConductLog is validating demand for a tool that helps small FCA-regulated firms handle conduct and misconduct processes. For your firm's specific obligations, check the FCA Handbook and consider professional advice.