Is Your Responsibilities Map Fit for Purpose?

Welcome to the SMF Capital podcast. Today we're looking at an important governance question for regulated firms: Is your Responsibilities Map actually fit for purpose? For an Enhanced firm, the Responsibilities Map is not simply a document prepared for the regulator and then filed away. It should provide a clear picture of how the firm is managed, how responsibilities are allocated between senior managers, and where accountability sits across the organisation. What Is a Responsibilities Map? ...

Welcome to the SMF Capital podcast.

Today we're looking at an important governance question for regulated firms:

Is your Responsibilities Map actually fit for purpose?

For an Enhanced firm, the Responsibilities Map is not simply a document prepared for the regulator and then filed away.

It should provide a clear picture of how the firm is managed, how responsibilities are allocated between senior managers, and where accountability sits across the organisation.

What Is a Responsibilities Map?

A Responsibilities Map provides a collective view of how an Enhanced firm's management and governance arrangements operate.

It sits alongside the individual Statements of Responsibilities held by SMF managers.

The FCA's guidance explains that Enhanced firms must have a Responsibilities Map and that it can be used to show how the firm is managed and governed.

The key distinction is important.

A Statement of Responsibilities tells you what an individual SMF holder is responsible and accountable for.

What Is the Map Supposed to Achieve?

The FCA's rules require an SMCR firm within scope to ensure that one or more SMF managers have overall responsibility for each relevant activity, business area and management function.

The allocation needs to be systematic, explicit and clear.

That leads to a simple test:

Can someone unfamiliar with the organisation look at your governance structure and understand who is accountable for what?

If the answer is no, the Responsibilities Map may need attention.

A good map should not merely reflect the organisation chart.

It should explain the actual allocation of management responsibility.

The Gap Test

One of the most useful ways to review a Responsibilities Map is to look specifically for gaps.

Consider the firm's major activities.

Who has overall responsibility?

Who reports to whom?

Which SMF is responsible for each relevant function?

Are any responsibilities sitting ambiguously between two executives?

Are there areas where everyone is involved but nobody is clearly accountable?

The FCA's rules are designed to prevent precisely this sort of ambiguity.

The purpose is not necessarily to give every individual activity its own separate SMF.

Instead, the firm needs a coherent allocation of responsibilities that covers the relevant activities without gaps.

The Overlap Test

The opposite problem can also occur.

Two senior managers may both believe that they have responsibility for the same area.

Sometimes that overlap is deliberate and appropriate.

But sometimes it reflects an unclear governance structure.

For example, consider an area involving technology, operations, risk and compliance.

Several executives may legitimately have an interest.

But who actually has overall responsibility?

Who makes the management decisions?

Who reports to the board?

Who is accountable for ensuring that the relevant controls operate effectively?

The Responsibilities Map should make those relationships understandable.

Has Your Business Changed?

A Responsibilities Map can become outdated surprisingly easily.

Perhaps the firm has grown.

A new Chief Operating Officer has joined.

The Chief Risk Officer has taken on additional responsibilities.

The compliance function has been reorganised.

A business line has been acquired.

Technology operations have been outsourced.

A new committee has been established.

Or the firm has moved from a relatively simple structure to a much more complex operating model.

Every one of these changes can potentially affect the way responsibilities are allocated.

A map that accurately described the business two years ago may no longer accurately describe it today.

Responsibilities Maps and SMF Changes

The connection between the Responsibilities Map and SMF recruitment is particularly important.

When a new SMF joins, the firm should not simply add another name to the organisation chart.

The new appointment needs to fit into the existing allocation of responsibilities.

Similarly, when an SMF leaves, the firm needs to consider what happens to the responsibilities previously allocated to that individual.

The FCA's rules specifically require firms to make clear who has which responsibilities.

That makes an SMF departure an obvious trigger for a governance review.

Is the Right Person Holding the Responsibility?

Another important question is whether the person allocated a responsibility is sufficiently senior and credible to discharge it effectively.

The FCA says individuals with overall or local responsibility should have sufficient seniority, resources and authority to exercise their responsibilities effectively.

The governance structure needs to evolve with the business.

That is an important governance principle.

The CEO should not become the accidental owner of every responsibility simply because nobody else has been clearly allocated the role.

The Board Challenge

A useful practical test is to ask:

Could the board use the Responsibilities Map to understand where accountability sits when something goes wrong?

The FCA describes SMFs as the firm's most senior decision makers, with key responsibilities allocated to them.

Every SMF holder also has a Statement of Responsibilities and a Duty of Responsibility.

The Responsibilities Map therefore needs to work alongside the firm's actual governance processes.

It should not be disconnected from the way management meetings, committees, reporting lines and escalation arrangements operate in practice.

The Outsourcing Test

Outsourcing is another area worth examining.

A firm may outsource technology, operations, compliance support, finance or other activities.

But outsourcing does not necessarily mean that senior management responsibility disappears.

The firm's governance structure still needs to make clear who has responsibility for the relevant activity and who oversees the relationship.

The map should therefore reflect the firm's real operating model, including important outsourced activities where relevant.

When Should You Review Your Responsibilities Map?

There is value in reviewing the map whenever there has been a material change to the firm's structure.

Useful triggers can include:

• Appointment or departure of an SMF holder
• Major organisational restructuring
• Acquisition or disposal of a business
• New regulated activities
• Significant outsourcing
• Creation of new executive functions
• Changes to board or committee structures
• Changes in reporting lines
• Movement into a different SM&CR category

The FCA's 2026 reforms have also changed aspects of the SM&CR framework, including the thresholds for Enhanced firms, making it sensible for firms to ensure their governance documentation reflects their current regulatory position.

You can explore the service here:

https://www.smfcapital.co.uk/governance-smf-structure-review/

The objective is not simply to produce another document.

It is to help ensure that the documented structure reflects how the business is actually managed.

What If the Review Identifies a Gap?

Sometimes a governance review identifies that the problem is not the document.

The problem is the organisation itself.

Perhaps an important responsibility has no obvious senior owner.

Perhaps an existing SMF has too broad a range of responsibilities.

Perhaps the business has grown to the point where another senior manager is needed.

Or perhaps the existing structure needs a new executive with the appropriate regulatory experience.

That is where governance and recruitment become closely connected.

SMF Capital also provides specialist SMF Recruitment Services for firms that need to appoint senior managers across regulated functions.

You can find out more here:

https://www.smfcapital.co.uk/smf-recruitment-services/

Final Thoughts

A Responsibilities Map should be more than a compliance document.

It should provide a clear picture of how responsibility actually works within the firm.

The strongest test is simple:

If a significant issue occurred tomorrow, could your board, senior management team and regulator clearly identify who was responsible for the relevant area?

If the answer is uncertain, it may be time to review the structure.

As businesses grow, responsibilities change.

SMFs join and leave.

New functions are created.

Operating models evolve.

Regulatory requirements change.

The Responsibilities Map needs to evolve with them.

If your firm is reviewing its SMF structure, governance arrangements or allocation of senior management responsibilities, visit SMF Capital's Governance & SMF Structure Review service.

And where a governance review identifies the need for additional senior leadership, SMF Capital's SMF Recruitment Services can support the search for the appropriate senior management talent.

SMF Capital — specialist governance, recruitment and senior management support for regulated businesses.