Independent Non-Executive Director Recruitment

Independent Non-Executive Director Recruitment

NED Capital places independent non-executive directors (INEDs) for FCA-regulated financial services firms, listed companies, PE-backed businesses and governance-critical organisations across the UK. The designation of independence is not incidental to an NED appointment — in regulated and listed company contexts it carries specific legal and governance code meaning, imposes defined assessment criteria and creates compliance obligations that a generalist search process does not address.

Adrian Lawrence FCA, founder of NED Capital and Fellow of the ICAEW, leads every INED mandate personally. We assess independence formally — against the FCA’s SMCR criteria, the FRC UK Corporate Governance Code or the QCA Code as applicable — before presenting any candidate as independent. We do not rely on candidates’ self-assessment of their own independence status.

Call 0203 137 2496 or email recruitment@nedcapital.co.uk to discuss an independent NED search mandate.

What Independence Means — The Governance and Regulatory Framework

Independence in the NED context has different meanings in different governance frameworks. Understanding which framework applies to your organisation — and what it specifically requires — is the starting point for any INED search.

FRC UK Corporate Governance Code independence criteria. The FRC Code defines independence for premium-listed companies through a combination of a general test (whether the director is independent in character and judgement and free from relationships or circumstances likely to affect that judgement) and a list of specific circumstances that should be disclosed and considered in assessing independence. These include: being a former employee of the company within five years; having or having had a material business relationship with the company; receiving remuneration beyond the director’s fee; having close family ties with any of the company’s advisers, directors or senior employees; holding cross-directorships or significant links with other directors through involvement in other companies; representing a significant shareholder; and having served on the board for more than nine years from the date of first election.

The nine-year provision is the most frequently triggered independence issue in listed company NED searches. A long-serving NED who has been on the board for nine or more years from their first election is presumed to have lost independence under the Code, requiring either enhanced board justification for continued tenure or a replacement search. We advise clients on nine-year independence assessments and support board refreshment planning to maintain independence requirements ahead of the relevant threshold.

QCA Corporate Governance Code independence criteria. For AIM-listed companies, the QCA Code requires that the board includes an appropriate number of independent non-executive directors to provide effective oversight of the executive team. The QCA Code’s independence criteria are less prescriptive than the FRC Code but increasingly scrutinised by institutional shareholders, proxy advisers and AIM rule advisers. We apply QCA independence criteria in all AIM-listed INED mandates and advise clients on how to address borderline independence situations in their specific context.

FCA Senior Managers and Certification Regime — INED requirements. In FCA-regulated firms, the independence of non-executive directors designated as INEDs under the Senior Managers and Certification Regime carries specific regulatory meaning. The FCA’s definition of an INED, set out in its supervisory expectations and the relevant PRA/FCA rulebooks, requires that the individual does not hold any other position within the firm that could conflict with their independent oversight role, has not recently been an employee or senior manager of the firm and does not have significant business interests that create material conflict. We assess SMCR INED eligibility formally for all financial services mandates and confirm the assessment with clients before shortlisting.

FCA SMCR — INED Roles in Regulated Firms

For FCA-authorised firms and dual-regulated PRA/FCA firms, independent non-executive directors typically hold one or more designated Senior Manager Functions that carry specific regulatory accountability. The principal INED functions under SMCR are:

SMF9 — Chair of the Governing Body. The most senior INED designation in regulated firms. The SMF9 holder is responsible for leading the governing body and is personally accountable to the FCA for the effectiveness of the firm’s overall governance arrangements. The FCA expects the SMF9 to be genuinely independent and to have relevant financial services governance experience. We assess SMF9 suitability specifically in all chair mandates for regulated firms.

SMF12 — Chair of the Nominations Committee. The INED responsible for overseeing the firm’s senior appointments and succession planning processes. The SMF12 must be independent of the executive team and must have experience of board appointment and governance processes at a relevant level. We assess SMF12 competency in nominations committee chair mandates.

SMF13 — Chair of the Audit Committee. One of the most technically demanding INED designations in regulated firms. The SMF13 must have recent and relevant financial experience — a requirement that aligns with the FRC’s audit committee chair competency definition. For banking and insurance firms subject to PRA rules, the audit committee independence requirements are particularly stringent. We assess SMF13 candidates’ financial services audit experience and their familiarity with the relevant PRA/FCA expectations for audit committee oversight.

SMF14 — Chair of the Risk Committee. The INED responsible for the board’s risk oversight function. Risk committee chairs in regulated firms require experience of risk governance frameworks relevant to the firm’s activity — credit risk for banks, underwriting risk for insurers, market and liquidity risk for investment managers. We assess SMF14 candidates’ sector-specific risk governance experience as part of every risk committee chair mandate in regulated financial services.

Candidates designated as SMFs must be approved by the FCA and, for dual-regulated firms, the PRA, before taking up their roles. The approval process requires submission of a Senior Managers Regime application with supporting evidence of the individual’s fitness and propriety. We advise clients on the information requirements for the approval application and can assist with compiling the required documentation for shortlisted candidates.

Our INED Assessment Process

Assessing an INED candidate requires more than a standard NED competency interview. For regulated and listed company mandates, we apply the following additional assessment steps before presenting any candidate as independent.

Formal independence assessment. We map each candidate against the independence criteria of the applicable governance code or regulatory framework — FRC, QCA or FCA SMCR as relevant — and document the outcome. Where a candidate has circumstances that require disclosure (a former role at the client firm, a material business relationship, a shareholding or family connection), we identify these before shortlisting and present them to the client for their determination. We do not present candidates as independent where our assessment indicates otherwise.

Conflicts review. Beyond formal independence criteria, we conduct a broader conflicts review covering existing directorships, business relationships, and any prior advisory or consulting relationships between the candidate and the client firm. For regulated firms, we also consider relationships with the firm’s major counterparties, significant suppliers and regulated group entities.

FCA fit and proper pre-assessment. For SMF-designated roles, we conduct a preliminary fit and proper assessment covering: criminal record; regulatory history including previous FCA or PRA regulatory findings; financial soundness; and references from prior positions. This assessment does not replace the FCA’s formal approval process but identifies issues before a candidate is presented to the client board for interview.

Reference verification. We verify references with people who have worked with the candidate in a board or regulatory context — specifically addressing their conduct in meetings, their approach to challenging management and regulators, and their track record of independence in practice. For INED mandates, references from former audit or risk committee colleagues carry particular weight.

INED Mandates by Sector

Banks and building societies. PRA-regulated firms face the most demanding INED requirements in the UK financial system. The PRA’s expectations for INED quality, independence and risk governance capability are set out in its supervisory statements and applied through the Senior Managers Regime approval process. We source banking INED candidates from our network of experienced financial services board directors with direct bank or building society governance experience.

Insurers and Lloyd’s managing agents. Insurance firms subject to Solvency II and dual PRA/FCA regulation require INEDs with specific familiarity with the insurance governance framework, including the ORSA (Own Risk and Solvency Assessment) process and the board’s role in capital management oversight. Lloyd’s managing agents have additional requirements under the Lloyd’s governance framework. We have placed INEDs for both general insurance and life insurance boards.

Wealth managers, IFAs and investment managers. FCA-authorised investment businesses require INEDs who understand the specific oversight responsibilities of a non-executive in an investment management or advice context — client outcomes, investment risk governance, conduct risk and the FCA Consumer Duty framework. We assess candidates’ Consumer Duty familiarity as part of investment firm INED mandates from 2024 onwards.

Fintech and payment firms. Fast-growth financial services businesses regulated by the FCA face INED requirements that combine the rigour of traditional financial services governance with the pace and complexity of technology-led business models. INED candidates for fintech boards need both financial services regulatory familiarity and sufficient technology governance literacy to provide effective oversight of the firm’s model. We assess both dimensions specifically for fintech INED mandates.

AIM and listed companies. For companies where independence is required by the QCA or FRC governance code, we conduct a formal independence assessment against the relevant code criteria before presenting candidates and advise on how to manage any borderline situations in the annual report governance disclosures.

INED Fee Benchmarks

INED fees in regulated financial services typically exceed standard NED fees for equivalent-sized companies, reflecting the regulatory accountability of SMF-designated roles and the additional time commitment of regulatory engagement. Current UK market benchmarks:

FCA-authorised investment managers and wealth managers: £35,000–£70,000 per annum for a standard INED role; £55,000–£95,000 for SMF13 or SMF14 committee chair designations. Firms subject to additional PRA requirements operate at the higher end.

Banks and building societies: £40,000–£100,000+ per annum for INED roles, depending on balance sheet size and regulatory complexity. Senior INED designations (SMF9, SMF13) carry the highest fees in this sector.

AIM-listed companies: £35,000–£60,000 for standard independent NEDs; £50,000–£85,000 for committee chairs. Independence on appointment is required under the QCA Code and we confirm this formally before shortlisting.