Financial Services – Non-Executive Recruitment

Financial Services NED Recruitment

NED Capital recruits independent non-executive directors and INEDs for FCA and PRA-regulated financial services firms across the UK. Financial services NED appointments are the most regulated category of board appointments in the UK — the Senior Managers and Certification Regime (SMCR) creates formal designation requirements, fit and proper assessments and ongoing regulatory obligations for independent non-executive directors that go substantially beyond the requirements of non-regulated NED roles. Adrian Lawrence FCA, founder of NED Capital and Fellow of the ICAEW, leads every financial services NED search personally.

We assess SMCR suitability, regulatory independence and prior regulated board experience for every financial services NED candidate before shortlisting. We do not present candidates for financial services INED roles who have not had their SMCR eligibility, independence status and fit and proper position assessed at brief stage.

Call 0203 137 2496 or email recruitment@nedcapital.co.uk to discuss a financial services NED appointment.

The SMCR and Financial Services INED Appointments

The Senior Managers and Certification Regime (SMCR) — introduced by the FCA and PRA in 2016 for banks and extended to all FCA-authorised firms in 2019 — creates a formal regulatory framework for senior management and non-executive director appointments in UK financial services firms. Under SMCR, specific senior management functions (SMFs) are designated to named individuals who are personally accountable to the regulator for the governance areas they oversee.

For INEDs on financial services boards, the most commonly designated SMF roles are:

SMF9 — Chair of the governing body. The most senior INED designation — the non-executive chair of the board. Formally accountable to the FCA/PRA for the board’s governance effectiveness and for overseeing the firm’s compliance with its regulatory obligations at board level.

SMF10 — Chair of the risk committee. The INED who chairs the board’s risk committee — formally accountable for the board’s risk oversight function, including the firm’s risk appetite framework and the oversight of the Chief Risk Officer.

SMF11 — Chair of the audit committee. The INED who chairs the audit committee — formally accountable for financial reporting integrity, the external audit relationship and the internal audit function’s effectiveness.

SMF12 — Chair of the remuneration committee. Formally accountable for the firm’s remuneration framework and its compliance with the FCA’s remuneration code provisions.

SMF13 — Chair of the nominations committee. Formally accountable for board composition governance, including the assessment of board members’ ongoing fitness and propriety.

SMF14 — Senior Independent Director. The designated SID for financial services firms — providing the governance accountability function for situations where shareholders or other stakeholders need to raise concerns outside the normal chair-CEO channels.

SMF2a / SMF2b — Non-Executive Directors. Standard NED designations for firms where the INED role carries specific regulatory accountability beyond committee chairmanship.

The designation of an INED to an SMF role requires notification to the FCA (and PRA where applicable) through the Form A process before the individual takes up the role. The FCA assesses whether the proposed INED meets the fit and proper requirements for the SMF designation — covering honesty, integrity and reputation; competence and capability; and financial soundness. The FCA can and does object to proposed appointments where candidates do not meet these requirements.

The Financial Services INED — Distinct from Standard NED

The financial services INED role is substantively different from a standard NED role on an equivalent non-regulated commercial company. The differences are not merely administrative — they reflect the specific governance demands of the regulated financial services environment and the personal accountability that SMCR designation creates.

Personal regulatory accountability. An SMF-designated INED is personally accountable to the FCA or PRA for the governance area they oversee. If the firm’s risk committee fails to identify and escalate a material risk that subsequently leads to regulatory action, the SMF10 (chair of risk committee) may be called to account. This personal accountability creates a governance obligation that is more immediate and more personal than the statutory director duties under the Companies Act — and it requires candidates who understand the regulatory accountability framework they are accepting when they take an SMF role.

Independence requirements under the regulatory framework. The FCA’s INED independence criteria require the INED to be free from relationships with the firm or its management that could compromise their objective oversight. This assessment is conducted both by the firm (prior to notification) and by the regulator. Our financial services NED searches assess independence formally against the FCA’s specific criteria, not just the FRC Code’s general independence provisions — the two frameworks overlap substantially but are not identical.

Ongoing fit and proper assessment. SMCR requires firms to assess their SMF holders’ fitness and propriety on an ongoing basis — not just at appointment. INEDs must remain fit and proper throughout their tenure and any change in circumstances that might affect their regulatory status must be notified to the FCA. This ongoing obligation is an additional governance responsibility that does not apply to standard NED roles.

Consumer Duty governance. The FCA’s Consumer Duty — in force since July 2023 — requires the boards of financial services firms to set, monitor and oversee the firm’s approach to delivering good consumer outcomes across the four outcome areas (products and services, price and value, consumer understanding and consumer support). The board must review a Consumer Duty annual report and satisfy itself that the firm is meeting its consumer duty obligations. INEDs are expected to have sufficient understanding of the Consumer Duty framework to engage meaningfully with this governance function.

Financial Services Firm Types — How NED Requirements Differ

The financial services sector is not homogeneous — the regulatory framework, board composition requirements and INED candidate profile differ significantly across different regulated firm types.

Banks and building societies. Dual-regulated by both the FCA and the PRA. PRA requirements for board composition and INED independence are the most prescriptive in the financial services sector — PRA’s approach to governance emphasises the INED’s ability to challenge the executive team on risk-taking and capital management. Finance-qualified INEDs with prior banking board experience are the most consistently sought profile.

Insurers. Also dual-regulated. PRA insurance governance requirements under Solvency II and its UK successor framework create specific board composition and INED accountability structures. Actuarial oversight, reserving governance and the Chief Actuary relationship are specific governance functions that INEDs on insurance boards need to understand.

Asset managers and investment managers. FCA solo-regulated. Governance requirements are shaped by the COLL sourcebook (for authorised fund managers), SYSC (systems and controls), MiFID II requirements and the Stewardship Code for firms managing discretionary assets. Investment management INEDs need familiarity with the investment governance framework — fee transparency, conflicts management, best execution oversight — that is specific to the asset management environment.

Wealth managers and financial advisers. FCA-regulated under the financial advice framework. Consumer Duty implementation is particularly intensive for wealth management and financial advice firms. INEDs in this sector need strong retail client governance awareness and familiarity with the advice suitability framework.

Fintech and payment firms. FCA-regulated, often under the Electronic Money Regulations or Payment Services Regulations. Board governance in fintech firms is typically less formal than in established financial services businesses, but SMCR still applies and the regulatory expectations for INED independence and governance quality are the same as for traditional financial services firms.

Consumer credit firms. FCA-regulated under the Consumer Credit Act framework and increasingly subject to Consumer Duty governance requirements. INEDs in consumer credit firms need awareness of the fair lending, affordability assessment and vulnerable customer governance requirements that are specific to this sector.

What Makes a Strong Financial Services INED

Prior regulated board experience. The most important criterion for financial services INED mandates. An INED who has served in an SMF-designated role on a comparable regulated firm — and who has engaged directly with FCA or PRA supervisors in that capacity — brings a regulatory familiarity that a strong commercial NED without regulated board experience cannot replicate in the short term.

Sector-specific competency. The INED must have sufficient understanding of the specific regulatory framework applicable to the firm — banking regulation, insurance governance, investment management compliance — to engage credibly with management and the regulator on governance matters. This is not a lawyer’s expertise requirement but a governance-level competency requirement.

Genuine independence. Free from relationships with the firm, its major shareholders or its senior management that could compromise objective oversight. The FCA’s independence assessment is formal, and we pre-assess independence against FCA criteria before shortlisting.

Regulatory credibility. The FCA and PRA have approved the individual’s fitness and propriety in an SMF role previously, or the candidate has a professional track record that clearly supports the fit and proper assessment. We assess regulatory credibility as part of our pre-screening and advise firms on the specific fit and proper positioning for each candidate before Form A notification.

Our Financial Services NED Search Process

SMCR and regulatory brief. We begin every financial services NED search with an assessment of the specific SMF designation required, the regulatory firm type and any FCA or PRA supervisor relationship context that should shape the candidate assessment. This regulatory brief is additional to the governance brief and shapes the candidate profile and pre-screening process.

Candidate pre-screening. Every candidate approached for a financial services INED mandate is pre-screened for SMCR eligibility, independence status and regulatory fit and proper position before being included in the shortlist. We do not present candidates who have not passed this pre-screening — doing so wastes client time and creates regulatory risk if a candidate fails FCA assessment after appointment.

Shortlist with regulatory assessment. Our financial services INED shortlists include a specific section on each candidate’s SMF history, their independence assessment against FCA criteria and our view on their fit and proper position. This is additional to the standard governance assessment that every NED Capital shortlist contains.

Form A support. We advise clients on the Form A notification process and on the supporting documentation that strengthens the fit and proper case for each proposed INED. We can connect firms with specialist regulatory counsel for complex notifications where FCA pre-notification engagement is appropriate.

Financial Services INED Fee Benchmarks

Financial services INED fees reflect the additional regulatory accountability, time commitment and personal liability exposure of SMF-designated roles. Current benchmarks:

FCA solo-regulated firms (wealth management, asset management, consumer credit, fintech): standard INED £35,000–£75,000; audit or risk committee chair £50,000–£100,000; non-executive chair £80,000–£200,000 depending on firm AUM/complexity.

Dual-regulated firms (banks, insurers): standard INED £45,000–£95,000; committee chairs £65,000–£130,000; non-executive chair £120,000–£350,000 depending on firm size and systemic importance.

These are substantially higher than equivalent private commercial company NED fees — the regulatory premium reflects the personal accountability, the time commitment of SMCR compliance and the reputational risk associated with regulated board appointments.