SMF14 Senior Independent Director: Responsibilities, Approval and CP26/37

SMF14, the Senior Independent Director function, is the senior management function held by the non-executive director who leads the board's assessment of the Chair. It applies at Enhanced firms and, as a PRA function, at banks and insurers that appoint a senior independent director. It is an approved role today; the FCA's CP26/37 and the PRA's CP14/26 propose to make it notified at dual-regulated and Enhanced firms.

What SMF14 covers

SUP 10C.5A.11R defines the function as performing the role of a senior independent director, with particular responsibility for leading the assessment of the performance of the person who holds SMF9, the Chair of the Governing Body. The PRA uses the same words in rule 4.6 of its Senior Management Functions Part for banks and rule 4.5 of its insurance equivalent.

In plain words, the senior independent director (SID) is the non-executive the other directors turn to when the issue is the Chair. The one duty the rules name is leading the Chair's appraisal. In practice the role also covers being a confidential route for directors and senior staff who have concerns about the Chair, and leading the search when the Chair is replaced.

The function only exists if the firm appoints a SID. The FCA's guide for solo-regulated firms gives the example of an Enhanced firm with no SID, which therefore needs no one approved as SMF14.

Example: a building society appoints its longest-serving independent non-executive as SID. The PRA approves her as SMF14, with the FCA's consent. She leads the annual review of the Chair and meets members of the board without the Chair present.

For the full set of roles see our Senior Management Functions guide.

Which firms need an SMF14

SUP 10C Annex 1 lists SMF14 as an FCA function only for Enhanced firms. At dual-regulated firms CP26/37 confirms SMF14 is a PRA function. The PRA's banking oversight functions do not apply to credit unions or third country branches.

The PRA adds a restriction for large insurers in a group: a group executive, meaning an executive of the parent or another group company, must not hold SMF14 at the insurer (PRA Insurance Senior Management Functions rule 13.3).

What the SMF14 holder is personally accountable for

Statement of Responsibilities. This is the document the regulator holds that lists what this person answers for. For SMF14 it records the SID role, leading the Chair's appraisal and any prescribed responsibilities. Our guide to statements of responsibilities covers drafting.

Prescribed responsibilities. These are specific duties the rules require a firm to give to a named senior manager. SYSC 24.3.2G expects the FCA's oversight responsibilities to sit with a non-executive senior manager. For a SID the realistic candidates are:

• PR N, the whistleblowers' champion, where it applies (UK banks and Solvency II insurers). The champion oversees the firm's whistleblowing arrangements, and a SID's independence from the Chair suits it.
• PR F, induction and training of the board, at UK banks and Solvency II insurers, if the Chair or nomination committee chair does not hold it.
• At dual-regulated banks, the PRA's oversight responsibilities, which must go to an oversight function such as SMF14 (PRA Allocation of Responsibilities rule 3.2).

Conduct Rules. The holder must follow the Individual Conduct Rules in COCON 2 and the Senior Manager Conduct Rules SC1 to SC4: keep your area under control, take reasonable steps to make it comply, delegate with care, and tell the regulator what it would reasonably expect to know. SC4 matters most for a SID: concerns about the Chair are often exactly what a regulator would expect to hear about.

Duty of Responsibility. Under section 66A(5) of FSMA the regulator can act against a senior manager if the firm breaches a requirement in their area and they did not take the steps a person in their position could reasonably be expected to take. DEPP 6.2.9-EG recognises that a non-executive's reasonable steps may differ from an executive's. COCON 1 Annex 1 confirms non-executives are not expected to take on executive duties, but must apply the care, skill and diligence expected of someone in their role.

Reasonable steps in practice

Our article on senior manager reasonable steps sets out the general standard. For a SID the evidence is mostly in board records that the Chair does not control.

The common gap is the Chair appraisal. A one-line board minute saying "the board considered the Chair's performance" is weak evidence. A short written report, based on structured input, is strong.

The first 90 days in the role

• Read the last two Chair appraisals and board effectiveness reviews, and the board minutes for the past year.
• Agree your Statement of Responsibilities, including PR N or PR F if allocated to you.
• Meet each non-executive and executive director one to one. Ask how the Chair runs the board.
• Set the timetable and method for the next Chair appraisal.
• Agree with the company secretary how a director or employee can reach you in confidence.
• Review the Chair succession plan with the nomination committee chair.
• If you hold PR N, read the last whistleblowing report and meet the person who runs the process.
• At a large firm, prepare for possible regulatory contact: the FCA lists SMF14 among roles it is likely to interview at large listed firms.

Applying for approval

Today the firm applies on Form A. At an Enhanced firm the FCA approves. At a dual-regulated firm the PRA approves and the FCA must consent. The firm must first be satisfied the candidate is fit and proper under FIT: honesty, integrity and reputation; competence and capability; and financial soundness. See our guide to fitness and propriety.

• Regulatory references: from the current employer and every employer in the past six years (SYSC 22.2.1R), due within four weeks of a request since 24 April 2026.
• Criminal records check: valid for six months; not needed for a move within the firm or group (PS26/6).
• Competence: board experience and independence from the Chair and management.
• Interview: the FCA names SMF14 among the roles it is likely to interview at large listed firms (How we assess). At dual-regulated firms the PRA may interview too, and the regulators aim for one joint interview.
• Timing: three months from a complete application under FSMA section 61, with the clock stopped while the regulator waits for information or an interview. The FCA has committed to work to two months.

A planned appointment cannot start early. The temporary cover rule allows cover only for a temporary or reasonably unforeseen absence. For FCA functions, PS26/6 gives the firm 12 weeks to submit an application, and the person can act until the FCA decides; at dual-regulated firms SMF14 follows the PRA's own temporary cover rule. Acting without approval outside that rule exposes the person to action under section 63A of FSMA.

What CP26/37 would change for SMF14

CP26/37 proposes notification, not approval, for SMF5, SMF10, SMF11, SMF12, SMF13, SMF14 and SMF15 at dual-regulated and Enhanced firms. The PRA's CP14/26 lists SMF14 among the PRA functions to become notified.

• At an Enhanced firm, the firm would notify the FCA through My FCA.
• At a dual-regulated firm, SMF14 is a PRA function, so the firm would notify the PRA. A notification to the PRA need not be copied to the FCA and needs no FCA consent.
• Before notifying, the firm makes the fitness and propriety decision and completes the same checks: regulatory references, criminal records check, right to work and a Statement of Responsibilities. The holder of PR A answers for the vetting.
• Notification can be made up to three months ahead and takes effect on the start date, or on acknowledgement if immediate.
• The Senior Manager Conduct Rules and the Duty of Responsibility apply exactly as they do to approved senior managers.
• Either regulator may require approval in exceptional cases, such as serious concerns about the firm's governance.

On prescribed responsibilities, the FCA would keep only PR A, PR D, PR Z and, at Enhanced firms, PR J-3. PR N would go as an FCA prescribed responsibility, but CP26/37 would amend SYSC 18.4.2R so that insurers and UK banks must still appoint a director or senior manager as whistleblowers' champion. The PRA says approvals granted before implementation stay valid.

Consultation closes on 22 January 2027. Final rules are expected in the first half of 2027 and would take effect around six months later, subject to the Financial Services and Markets Bill. Core and Limited Scope firms are not affected. See our CP26/37 article.

Holding SMF14 with other functions

• SMF9, Chair of the Governing Body: incompatible in substance. SMF14 leads the assessment of the SMF9 holder, so one person cannot do both.
• SMF13, Chair of the Nomination Committee: a natural pairing, as the SID often leads Chair succession. See our SMF13 guide.
• SMF10, SMF11 or SMF12, committee chairs: common, but the workload adds up. SYSC 24.3.6G warns against giving one senior manager more than they can carry out. See our SMF11 guide.
• Executive or group executive roles: a SID must be independent. At large insurers PRA rules bar a group executive from SMF14.

How we support SMF14 holders

We prepare senior independent directors for approval and, under the proposed rules, for notification, building the work around the Chair appraisal and the board records a supervisor will read. See our Senior Manager training and SM&CR support.

• one-to-one Senior Manager training built on the person's own Statement of Responsibilities
• drafting and review of the Statement of Responsibilities
• the Form A application and fitness and propriety file
• FCA interview preparation
• handover arrangements