SMF9 — Non-Executive Chair Appointments

SMF9 — Non-Executive Chair Appointments

FCA and PRA-Regulated Firms

NED Capital places non-executive chairs for FCA-authorised and PRA-regulated firms requiring SMF9 designation. The SMF9 function — Chair of the Governing Body — is the most senior Senior Manager Function applicable to independent non-executive directors in regulated financial services firms. The SMF9 holder is personally accountable to the FCA and PRA for the board’s governance effectiveness and for the firm’s compliance with its regulatory obligations at board level. Finding a non-executive chair who meets the FCA’s and PRA’s independence, competence and fit and proper requirements — and who has the governance experience to lead a regulated firm board effectively — requires a search approach specifically designed for the regulatory context. Adrian Lawrence FCA, founder of NED Capital and Fellow of the ICAEW, leads every SMF9 search personally.

Call 0203 137 2496 or email recruitment@nedcapital.co.uk to discuss an SMF9 chair appointment.

What SMF9 Means — The Chair’s Regulatory Accountability

The SMF9 designation — Chair of the Governing Body — is defined in the FCA’s Senior Managers and Certification Regime as applying to the individual responsible for chairing the board of directors of a regulated firm. The SMF9 holder’s regulatory accountability differs from the chair’s standard company law duties in that it creates a personal regulatory relationship with the FCA and PRA — the SMF9 holder can be called to account directly by the regulator for the board’s governance effectiveness and for failures in the firm’s regulatory compliance that arise from inadequate board oversight.

Under the SMCR Duty of Responsibility, every SMF holder — including the SMF9 chair — is personally responsible for taking reasonable steps to prevent regulatory breaches in their area of accountability. Where a regulated firm fails to meet its regulatory obligations and the failure is within the board’s governance responsibility, the FCA can investigate whether the SMF9 chair took reasonable steps to prevent the failure. The personal accountability of the SMF9 designation is therefore materially more significant than the general director duty framework under the Companies Act — it creates a regulatory accountability that sits alongside, and in some respects extends, the statutory director duties.

PRA Expectations for Chairs of PRA-Regulated Firms

For firms regulated by both the PRA and FCA (banks, building societies, insurance companies, large investment firms), the PRA’s expectations for the SMF9 chair are particularly demanding and have been communicated through multiple PRA supervisory statements and letters to boards.

Genuine independence. The PRA expects the chair of a dual-regulated firm’s board to be genuinely independent — not only formally independent under the applicable independence criteria, but behaviourally independent. A chair who consistently defers to management’s position, who avoids challenging the CEO on difficult governance questions or who has relationships with the firm’s major shareholders that compromise their objectivity does not meet the PRA’s expectations for the SMF9 function, regardless of their formal independence status.

Supervisor relationship management. The PRA maintains direct supervisory relationships with the chairs of firms it regulates. The SMF9 chair is expected to engage substantively with the PRA supervisor — attending meetings with the PRA, responding to PRA requests for information and communicating transparently about governance concerns the board has identified. A chair who treats the PRA relationship as a management function — delegating all regulator contact to the CEO or CFO — is not meeting the PRA’s expectations for the SMF9 function.

Board effectiveness leadership. The PRA expects the SMF9 chair to demonstrate that the board is operating as an effective governance body — producing substantive challenge of management, maintaining adequate risk governance and operating in accordance with the firm’s governance framework. The PRA’s supervisory assessment of a firm’s governance includes a specific evaluation of whether the chair is providing effective board leadership, and chairs who are identified as ineffective can expect direct PRA supervisory engagement.

SMF9 Chair — Governance Responsibilities

The SMF9 chair’s governance responsibilities in a regulated firm context combine the standard non-executive chair functions (described on our Non-Executive Chair Recruitment page) with the specific regulatory governance obligations of the SMF9 designation.

Board leadership and culture. Setting the tone for board governance, chairing board meetings, managing the board’s deliberations and ensuring that all directors contribute effectively — with specific attention to the culture of independent challenge that the PRA expects from regulated firm boards.

CEO relationship governance. The most consequential bilateral relationship in the firm’s governance. For regulated firms, this relationship has an additional regulatory dimension — the chair must ensure that the CEO is managing the firm in accordance with its regulatory obligations and must escalate to the regulator where the CEO’s management raises governance concerns that cannot be resolved through normal board processes.

Regulatory engagement. Direct engagement with the PRA and FCA supervisory teams — representing the board’s governance perspective in supervisory meetings, responding to regulatory requests for information and communicating transparently about governance challenges the board has identified.

SMCR governance oversight. The SMF9 chair oversees the firm’s SMCR governance framework — ensuring that all SMF designations are appropriately notified, that annual fit and proper assessments are conducted and that the SMCR obligations applicable to the board are being met.

SMF9 Chair Candidate Profiles

Former chairs or senior INEDs of comparable regulated firms. The strongest SMF9 candidates have prior experience of chairing or serving as a senior INED at a comparable regulated firm — a bank, insurance company, asset manager or major FCA-authorised firm — at a similar scale and complexity. Their direct prior experience of the regulatory governance framework, including supervisory engagement, creates immediate credibility with the PRA and FCA that more generalist governance candidates cannot demonstrate.

Former senior regulators and central bank officials. Former senior FCA and PRA officials, former Bank of England executive directors and former senior officials from comparable overseas regulators who have transitioned to governance roles bring the regulatory perspective that is specifically valuable in regulated firm chair appointments. Their relationships with current regulatory officials and their understanding of regulatory expectations from the inside create both governance credibility and practical supervisory relationship value.

Experienced financial services NEDs making the transition to chair. Senior INEDs at regulated firms — particularly those holding committee chair designations (SMF10, SMF11) who are ready to step up to the SMF9 function — provide a governance-experienced profile that has already been approved through the SMCR process and understands the regulatory environment at board level.

SMF9 Fee Benchmarks

SMF9 chair fees for regulated firms reflect the seniority of the role, the regulatory accountability of the designation and the firm’s size and systemic importance. Major banks and systemically important financial institutions: £350,000–£700,000 per annum. Mid-tier banks and insurers: £200,000–£400,000. Smaller FCA-authorised firms and dual-regulated mid-size institutions: £80,000–£200,000. FCA solo-regulated firms (asset managers, wealth managers, consumer credit): £60,000–£150,000. These fees are substantially above standard chair market rates for non-regulated companies of equivalent size, reflecting the regulatory accountability premium of the SMF9 function.