SMF9 Chair of the Governing Body: Responsibilities, Approval and CP26/37

SMF9, the Chair of the Governing Body function, is the senior management function held by the person who chairs a firm's board and is responsible for how well that board works. It applies at Core and Enhanced firms that have a chair, and at banks and insurers it is a PRA function that the PRA requires those firms to fill. It is an approved role: the regulator must approve the person before they start, and the FCA's CP26/37 does not propose to change that.

What SMF9 covers

SUP 10C.5A.7R defines the chair of the governing body function as having responsibility for chairing, and overseeing the performance of the role of, the governing body of the firm. The governing body is the board of directors, or the equivalent body in a partnership, mutual or LLP. In plain words, SMF9 is accountable for the board as a working unit: what it discusses, what information it sees, how well it challenges the executive and whether it has the right people.

In practice the holder is the non-executive chair. Job titles include Chair, Chairman and Board Chair. At a Core firm, the chair is the only non-executive director who needs approval: other non-executive directors are not senior managers there, as SUP 10C.5A.1G explains.

Example: an independent chair joins the board of a UK wealth manager with about 40 staff. The firm is a Core firm. The chair needs FCA approval as SMF9 before taking the chair. The other two non-executive directors do not need approval, but they are subject to the Conduct Rules.

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

Which firms need an SMF9

The FCA function list is in SUP 10C Annex 1. At banks and insurers the chair is a PRA function under the PRA Rulebook.

PRA rules require a CRR firm (a bank, building society or PRA-designated investment firm), other than a credit union or third country branch, to have someone performing the chair function. The insurance rules contain an equivalent requirement for most UK insurers. At those firms the chair's FCA governing functions, for example chairing the nomination committee, are absorbed into the PRA approval under SUP 10C.9.8R, so no second approval is needed.

Cryptoasset firms authorised under the new UK regime become SM&CR firms on 25 October 2027. The FCA does not expect many, if any, cryptoasset-only firms to be Enhanced when the regime starts, so the Core firm table applies: a cryptoasset firm with a board chair will need an SMF9.

What the SMF9 holder is personally accountable for

Statement of Responsibilities. This is the document, held by the regulator, that lists what this person answers for. For a chair it should be short. The FCA expects a non-executive director's statement to be less extensive than an executive's, and the general duties of a non-executive director do not need to be repeated in it (SUP 10C.11.34G and 10C.11.35G). 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. Which ones fall to the chair depends on the firm:

• Authorised fund managers: SYSC 24 Annex 2 names SMF9 as the most appropriate holder of PR ZA, the COLL responsibilities for value assessments and acting in investors' best interests.
• UK banks: the FCA lists SMF9 as a natural holder of PR F, leading the induction, training and development of board members.
• Dual-regulated banks and insurers: PRA rules require responsibilities such as PR F and PR I (leading the board's development of the firm's culture) to go to an oversight function such as the chair (PRA Allocation of Responsibilities).
• Core firms: the FCA considers it harder to justify giving PR A, PR B, PR D or PR Z to SMF9, because those are executive responsibilities.

Conduct Rules. As a senior manager the chair must follow the five Individual Conduct Rules and Rule 6 on the Consumer Duty, plus the Senior Manager Conduct Rules in COCON 2:

• SC1: take reasonable steps to ensure the business you are responsible for is controlled effectively
• SC2: take reasonable steps to ensure it complies with the regulatory system
• SC3: take reasonable steps to ensure any delegation is to an appropriate person and is overseen
• SC4: disclose appropriately anything the FCA or PRA would reasonably expect to know

The non-financial misconduct rules in force since 1 September 2026 also apply to the chair's own conduct; see our article on non-financial misconduct.

Duty of Responsibility. Under section 66A(5) of FSMA the regulator can act against a senior manager if the firm breaches a requirement in an area they were responsible for and they did not take the steps a person in their position could reasonably be expected to take. The FCA must prove this. DEPP 6.2.9-EG says the steps expected of a non-executive may differ from those expected of an executive, and points to the guidance on non-executive directors in COCON 1 Annex 1. That guidance says a chair is responsible for the board meeting often enough, open discussion that challenges executives, enough time on the right matters and the board having the information it needs. A chair is not expected to take on executive responsibilities.

Reasonable steps in practice

Reasonable steps for a chair are about the board's process, not the firm's operations. The evidence lives in board papers and records. Our article on senior manager reasonable steps sets out the general standard.

Minutes are the key record. A minute that reads "the board noted the report" shows nothing. A minute that records the question, the answer and the action shows the chair ran a board that challenged.

The first 90 days in the role

• Read the handover pack and the last 12 months of board and committee papers. Enhanced firms must have handover procedures under SYSC 25.9.
• Agree your Statement of Responsibilities with the company secretary and the holder of PR A.
• Hold one-to-one meetings with each director, the chief executive, the heads of risk, compliance and internal audit, and the external auditor.
• Review the board's reserved matters and every committee's terms of reference.
• Agree the management information the board will receive and the deadline for papers.
• Set the forward agenda for the next year.
• Review the skills matrix against the firm's strategy and risks, and agree a board training plan.
• Commission or schedule the next board effectiveness review.

Applying for approval

The firm applies on Form A through the FCA's Connect system. At a dual-regulated firm the application goes to the PRA, which cannot approve without the FCA's consent (SUP 10C.9.11G). Before applying, the firm must be satisfied the candidate is fit and proper: honest, competent and financially sound. Our guide to fitness and propriety covers the tests.

• Criminal records check: the firm obtains a basic check no more than 6 months old when it applies. It is not needed for a move within the firm or group, or where the firm already checked the candidate as a board director of the firm or a group firm (SUP 10C.10.16R).
• Regulatory references: from the current employer and anyone who employed the candidate in the past six years. Since April 2026 firms must give a reference within four weeks.
• Competence: the FCA expects a skills gap analysis and induction plan for the candidate.
• Interview: the FCA says it is likely to invite the chair (SMF9) of a large listed firm for interview (FCA guidance). For other firms an interview is possible where questions arise.
• Timing: the regulator has three months from a complete application. The FCA has committed to work to two months.

The chair cannot start a planned appointment before approval. The temporary cover rule lets a firm cover a senior manager's temporary or reasonably unforeseen absence, for example by letting the deputy chair act, for up to 12 weeks, or until the regulator decides if the firm applies within those 12 weeks. Performing the role without approval exposes the person to action under section 63A of FSMA and the firm to a breach of section 59.

What CP26/37 would change for SMF9

CP26/37 does not make SMF9 notified. At dual-regulated and Enhanced firms the FCA proposes notification for SMF5, SMF10, SMF11, SMF12, SMF13, SMF14 and SMF15. SMF9 is not on that list, and the PRA's CP14/26 also keeps the Chair of the Governing Body as a pre-approved function. Core firms keep their current SMF roles. The changes that do touch the chair are:

• Group chairs: the narrower SMF7 at solo-regulated firms would cover a person who exercises significant influence and performs a listed group function, including chair of the governing body. A parent company chair who influences the firm would still be an SMF7. See our SMF7 guide.
• Prescribed responsibilities: the FCA would keep only PR A, PR D, PR Z and, for Enhanced firms, PR J-3. PR F and PR ZA would no longer be FCA prescribed responsibilities, though the COLL rules themselves still place responsibilities on an approved chair of an authorised fund manager.
• Temporary cover: 18 weeks instead of 12 for FCA functions, with a "reasonable use" test. At dual-regulated firms SMF9 is a PRA function, and the PRA keeps the "temporary or reasonably unforeseen" test.
• Conditional approvals: dual-regulated firms, solo firms in dual-regulated groups and Enhanced firms could ask for time-limited or conditional approval. The PRA's example is a chair agreeing to give up directorships above the PRA limit.
• Statements of Responsibilities: no routine refiling, but kept current and provided on request.

Consultation closes on 22 January 2027, with final rules expected in the first half of 2027 and changes in force around six months later, subject to the Financial Services and Markets Bill. Our CP26/37 article covers the full package.

Holding SMF9 with other functions

• SMF13, Chair of the Nomination Committee: the most common pairing. At a dual-regulated firm chairing the nomination committee is absorbed into the PRA SMF9 approval, as example (11) in SUP 10C.9.9G shows. See our SMF13 guide.
• SMF1, Chief Executive: PRA rules bar the same person from being chair and chief executive at a CRR firm, and at a large insurer. SYSC 4.3A.2R applies the same bar to common platform firms, subject to a waiver.
• SMF14, Senior Independent Director: SMF14 leads the assessment of the chair's performance, so one person cannot sensibly hold both. See our SMF14 guide.
• Committee chairs: a chair may also chair a committee, but each extra role adds to the Statement of Responsibilities and to the time commitment the regulator will test. Significant common platform firms must also respect the directorship limits in SYSC 4.3A.6R.

How we support SMF9 holders

We prepare chairs and their firms for approval and for the role itself, working from the chair's own responsibilities and the board's actual 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