SMF15 Chair of the With-Profits Committee: Which Insurers, Duties and CP26/37

SMF15, the Chair of the With-Profits Committee function, is the senior management function held by the person who chairs an insurer's with-profits committee, or who provides its with-profits advisory arrangement, the independent check on how the insurer treats with-profits policyholders. It applies only to UK insurers that carry on with-profits business, and to UK branches of overseas insurers that do. It is an FCA approved role today; the FCA's CP26/37 proposes to make it notified.

What SMF15 covers

SUP 10C.5A.5R says that if a firm has a with-profits committee, SMF15 is acting as a non-executive chair of that committee. Where the firm instead has a with-profits advisory arrangement, SUP 10C.5A.6R says SMF15 is whichever applies: the independent person appointed under that arrangement, or the non-executive directors who perform it.

With-profits business means insurance policies whose payouts depend partly on the insurer's discretion, for example annual and final bonuses decided from the fund's performance. COBS 20.5.1R requires a firm to appoint a with-profits committee for each with-profits fund, or an advisory arrangement if the board considers that appropriate for the fund's size, nature and complexity. The committee advises the board; the board keeps ultimate responsibility for managing the fund.

So the SMF15 holder can be one of three people:

• the non-executive chair of a with-profits committee
• an independent person, who may not be a director of the insurer at all
• the non-executive directors who provide an advisory arrangement

Example: a mid-sized life insurer has a closed with-profits fund. Its board appoints a with-profits committee of four, chaired by an independent actuary with no other link to the group. The chair needs FCA approval as SMF15 before taking the chair, even though he sits on no other board committee.

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

Which firms need an SMF15

SUP 10C Annex 1 lists SMF15 only in the table for insurance sector firms.

Two further points narrow the list. COBS 20 applies to firms carrying on with-profits business, but COBS 20.1.4R disapplies the with-profits governance rules for non-directive friendly societies. And every firm that can hold SMF15 is an insurer supervised by both the PRA and the FCA. SMF15 is an FCA function at those firms: the PRA has no with-profits committee function. The PRA's related role is SMF20a, the With-Profits Actuary, who advises the board on the exercise of discretion.

Under SUP 10C.9.8R, a person approved by the PRA for a PRA function, whose PRA application said they would chair the with-profits committee from the same time, does not need separate FCA approval as SMF15.

What the SMF15 holder is personally accountable for

Statement of Responsibilities. This is the document the regulator holds that lists what this person answers for. For SMF15 it records chairing the committee, or providing the advisory arrangement, and overseeing its work under its terms of reference. Prescribed responsibilities, the specific duties the rules require a firm to give to a named senior manager, are rarely allocated to SMF15. See our guide to statements of responsibilities.

What the committee must do. COBS 20.5.3R sets out the minimum terms of reference. The committee must assess, report on and advise the board on:

• how each with-profits fund is managed and whether the Principles and Practices of Financial Management (PPFM, the firm's published rulebook for running the fund) properly reflect that
• whether the firm complies with its PPFM
• whether conflicting interests are addressed in line with Principle 6 or the Consumer Duty
• candidates for the with-profits actuary, and that actuary's performance at least once a year

Conduct Rules. As a senior manager, the holder must follow the Individual Conduct Rules in COCON 2, including Rule 6 on delivering good outcomes for retail customers, and the Senior Manager Conduct Rules SC1 to SC4. That applies even to an independent person who is not a director.

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. For SMF15 the area is the committee's advice on fair treatment of with-profits policyholders. DEPP 6.2.9-EG accepts that a non-executive's reasonable steps may differ from an executive's.

Reasonable steps in practice

The general standard is in our article on senior manager reasonable steps. COBS 20.5 gives an SMF15 holder an unusually specific checklist.

The board's duty in COBS 20.5.5R to give reasons when it departs from the committee's advice is the SMF15 holder's strongest tool. A committee that records its advice in writing, and the board's answer, has evidence that it did its job.

The first 90 days in the role

• Read the PPFM, the committee's terms of reference and the last two annual reports to with-profits policyholders.
• Agree your Statement of Responsibilities, and confirm whether you chair a committee or provide an advisory arrangement.
• Meet the With-Profits Actuary (SMF20a) and the Chief Actuary (SMF20) separately.
• Review the committee's membership against the independence factors in COBS 20.5.7G, such as employment in the last five years or more than nine years on the board.
• Check the resources the firm gives the committee, as COBS 20.5.5R(2) requires sufficient resources.
• Review open questions on the fund: surplus distribution, smoothing, charges and any planned reattribution or run-off.
• Set the annual calendar, including the with-profits actuary assessment and the committee's annual statement.

Applying for approval

Today the firm applies on Form A and the FCA approves SMF15, even though the firm is dual-regulated. 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: with-profits, actuarial or investment experience, and independence from the firm under COBS 20.5.7G.
• Interview: possible where the FCA has questions about fitness or the role's impact (How we assess).
• Timing: three months from a complete application under FSMA section 61, with the clock stopped while the FCA waits for information. The FCA has committed to work to two months.

A planned appointment cannot start before approval. Under the temporary cover rule, someone may cover a temporary or reasonably unforeseen absence; since PS26/6 the firm has 12 weeks to submit an application and the person can act until the FCA decides. Acting without approval outside that rule exposes the person to action under section 63A of FSMA.

What CP26/37 would change for SMF15

CP26/37 proposes that SMF5, SMF10, SMF11, SMF12, SMF13, SMF14 and SMF15 become notified, not approved, at dual-regulated and Enhanced firms. Because every SMF15 sits in a dual-regulated insurer or insurance branch, the change would reach every SMF15 appointment. The draft SUP 10C Annex 1 marks SMF15 as notified for both UK insurers and overseas branches.

• The firm makes the fitness and propriety decision itself and completes the same checks first: regulatory references, criminal records check, right to work and a Statement of Responsibilities. The holder of PR A answers for that vetting.
• SMF15 is an FCA function, so the firm notifies the FCA through My FCA, up to three months before the start date.
• The FCA runs only automated checks. The appointment takes effect on the start date, or on acknowledgement if immediate, and the person appears on the Financial Services Register.
• The Senior Manager Conduct Rules and the Duty of Responsibility apply exactly as before.
• The FCA may still require approval in exceptional cases, using its section 55L powers.

COBS 20.5 is not changed by CP26/37, so the committee's duties stay the same. Separately, the PRA's CP14/26 proposes making SMF20a, the With-Profits Actuary, a notified PRA function, so both senior with-profits roles would be appointed by notification.

Firms can keep applying until commencement and notify later start dates from one month before. 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. See our CP26/37 article.

Holding SMF15 with other functions

• SMF10 or SMF11, risk or audit committee chair: possible, and SUP 10C.9.8R can absorb SMF15 into the PRA approval if both are applied for together. Check the person's independence under COBS 20.5.7G. See our SMF10 guide.
• SMF14, Senior Independent Director: workable for a non-executive with with-profits expertise. See our SMF14 guide.
• SMF9, Chair of the Governing Body: difficult. The committee advises the board the Chair leads, and the board must answer the committee in writing.
• SMF20a, With-Profits Actuary: should not be combined. The committee advises on the actuary's appointment and assesses their performance.

How we support SMF15 holders

We prepare with-profits committee chairs and independent persons for approval and, under the proposed rules, for notification, working from the fund's PPFM and the committee's records. 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