Which Senior Manager Functions Apply

How the Senior Managers regime applies to a consumer credit firm depends on its permissions and size.

• Limited permission firms, such as retailers or motor dealers whose main business isn’t credit but who broker or provide credit alongside it, are generally Limited Scope firms under the regime, with a much smaller set of Senior Manager Functions.
• Full permission firms, including most lenders, brokers and debt collection firms, are usually Core firms. The core Senior Manager Functions typically include the Chief Executive, executive directors, the Chair where there is one, and compliance oversight and money laundering reporting.
• The largest lenders can meet the thresholds for Enhanced status, which brings additional Senior Manager Functions, including risk and finance roles, and a Responsibilities Map.

Our guide to which SMFs apply at each firm tier sets out the full mapping. Whichever tier applies, the Consumer Duty and the Consumer Credit sourcebook shape what the regulator expects the senior team to oversee.

Where the FCA Focuses in Consumer Credit

Affordability and Creditworthiness

Lenders must assess whether customers can afford to repay without significant adverse effect on their finances. The FCA expects senior management to understand how the firm’s affordability model works, how it performs in practice and what happens when customers’ circumstances change. Weaknesses here have led to large-scale redress in several parts of the market.

Forbearance and Customers in Financial Difficulty

The FCA has repeatedly emphasised that firms must treat customers in financial difficulty with appropriate forbearance and due consideration. Senior Managers need management information that shows how customers in arrears are treated, not just how much is collected.

The Consumer Duty

The Consumer Duty requires firms to deliver good outcomes for retail customers, including fair value and support that meets customers’ needs. For credit firms, that means looking closely at pricing, fees and charges, the treatment of vulnerable customers and whether products work as intended. The board must review an annual assessment of whether the firm is delivering good outcomes, and Senior Managers must be able to evidence the conclusions.

Complaints and Redress

Complaint trends, including those escalated to the Financial Ombudsman Service, are often the first sign of a wider problem. The FCA expects senior management to analyse complaints for root causes and act on them, rather than treat each complaint in isolation. The high-profile scrutiny of commission arrangements in motor finance has shown how historic practices can become significant issues years later.

The Senior Roles That Matter Most

A Chief Executive Who Owns Customer Outcomes

At a consumer credit firm, the chief executive can’t delegate customer outcomes to compliance. The FCA expects the person running the business to understand how it treats customers and to make decisions with that in mind. Candidates with experience of leading a credit business through regulatory change, remediation or a Consumer Duty implementation are in strong demand.

A Compliance Function With Credit Expertise

Compliance officers at credit firms need specific knowledge of CONC, affordability, collections and financial promotions for credit products. Generalist compliance experience from investment or insurance firms transfers only partly. Where compliance and money laundering reporting are combined, which is common at smaller firms, the individual also needs a firm grasp of fraud and financial crime risks in lending.

Risk and Credit Risk Leadership

Larger lenders need a risk function that can challenge both credit risk and conduct risk. At Enhanced firms this can include an SMF4 Chief Risk Officer. At smaller firms, a head of risk or head of credit risk with strong conduct awareness often fills the gap, reporting to the board or an independent non-executive.

A Finance Team That Understands Credit

Credit businesses depend on finance teams that understand impairment, funding, securitisation or wholesale facilities, and the regulatory reporting that comes with a credit licence. Our sister practice Accountancy Capital recruits qualified finance professionals below director level, including financial controllers, credit and impairment specialists and regulatory reporting accountants for lenders.

Independent Non-Executives

Many consumer credit firms are founder-led or private equity backed. An independent non-executive with consumer credit and conduct experience gives the board a voice focused on customer outcomes and regulatory risk. For firms facing a remediation programme or a skilled person review, that independence can be especially valuable.

Hiring Challenges in Consumer Credit

A Tight Candidate Pool

Experienced credit compliance officers and risk leaders are in short supply, and many are already approved at other firms. Firms often compete for the same small group of candidates, particularly for roles at firms under regulatory pressure.

Candidates Look Hard at Regulatory History

Experienced Senior Managers are cautious about joining firms with unresolved regulatory issues, because they’ll carry personal accountability for their area. Firms facing redress or remediation should be open about it and explain how the new Senior Manager will be supported. Candidates who understand exactly what they’re taking on are more likely to accept and to stay.

Interim Cover During Remediation

Firms going through remediation, a skilled person review or a significant change programme often need experienced interim Senior Managers while they recruit permanently. An interim holder with remediation experience can stabilise the function and help the firm specify the permanent role.

First-Time Senior Managers

Some of the best candidates are experienced heads of function stepping up to their first Senior Manager role. They can be excellent appointments, but the application needs to make a clear case against the fit and proper test. Our article on first-time Senior Manager roles explains how.

Brokers, Debt Collectors and Specialist Lenders

Not every consumer credit firm is a mainstream lender, and the senior team should reflect the firm’s actual business. Credit brokers need Senior Managers who understand commission disclosure, financial promotions and the oversight of appointed representatives or introducers. Debt collection and debt purchase firms need particular strength in treating customers in financial difficulty fairly, since almost every customer they deal with is in arrears. Specialist lenders, such as those serving customers with impaired credit histories, face heightened expectations on affordability and vulnerability.

In each case, the most valuable candidates are those who have worked in the same part of the market and can show how they improved customer outcomes there.

Questions Boards Should Ask

• Does the chief executive receive management information on customer outcomes, not just lending volumes and arrears?
• Does the compliance function have specific consumer credit expertise?
• Is there an independent voice on the board focused on conduct and customer outcomes?
• Are complaints analysed for root causes, and is action taken?
• If a key Senior Manager left tomorrow, who would cover the role?

The Bottom Line

Consumer credit firms operate under close regulatory scrutiny, and the quality of the senior team is central to how the FCA judges them. Firms that appoint a chief executive who owns customer outcomes, a compliance function with genuine credit expertise, a risk function that challenges and a board with an independent voice are far better placed to meet the regulator’s expectations, and to grow with confidence.