In financial services, unexpected departures at the senior level can create serious challenges. The resignation of an SMF2 CFO, SMF24 COO, or SMF16/17 Head of Compliance is not just about losing a key individual—it’s about regulatory oversight, investor confidence, and ensuring the firm continues to operate without disruption. Yet, too often, firms only think about succession planning when they urgently need a replacement, rather than taking proactive steps to prepare for inevitable changes.

For FCA-regulated firms, senior leadership succession isn’t just good business practice—it’s a regulatory expectation. Under the Senior Managers & Certification Regime (SM&CR), firms are responsible for ensuring that key functions are properly resourced at all times. The FCA expects that firms have clear contingency plans in place, particularly for critical roles like CFOs, COOs, and Heads of Compliance. A well-planned approach avoids the scramble that can come when a resignation lands unexpectedly on a CEO’s desk.

When a senior leader resigns without a clear successor or interim cover, firms face a range of operational and regulatory risks. FCA approval is required for SMF hires, and if a regulated firm cannot promptly appoint a new CFO or COO, it may struggle to satisfy the FCA’s fitness and propriety requirements. In a worst-case scenario, the firm may even find itself under greater regulatory scrutiny.

Beyond the regulatory headaches, a gap at the top can also create uncertainty among employees and clients. Institutional investors and regulators will want to know that the business is stable, while internal teams need clear leadership to avoid disruption. In functions like compliance and financial oversight, even a short-term leadership gap can lead to serious challenges in regulatory reporting, capital requirements, and governance oversight.

Succession planning is not about expecting a departure tomorrow, but rather about creating a long-term talent pipeline. Firms should continuously map out potential successors internally, while also being aware of external talent who could step in if required.

An effective plan starts by identifying the key competencies required for senior roles. What makes an effective SMF16, SMF24, or SMF2 at your firm? While technical expertise is a given, successful leaders in financial services also need strong regulatory understanding, risk awareness, and strategic vision.

Where an internal successor isn’t obvious, it’s critical to engage with a specialist search firm that understands your industry and has access to a discreet network of experienced candidates. In situations where a long-term hire isn’t immediately possible, an interim appointment can help bridge the gap, ensuring stability while the right long-term hire is secured.

The best time to think about succession is before a resignation happens. Too many firms focus on the immediate demands of their current leadership team, rather than proactively planning for inevitable change.

A structured succession strategy protects business continuity, satisfies regulatory expectations, and reduces hiring risk. Whether it's a planned transition or an unexpected resignation, firms that have prepared will always be in a stronger position than those caught off guard.

For asset managers, hedge funds, banks, and brokers, the ability to quickly identify and appoint CFOs, COOs, and Compliance Directors can mean the difference between smooth continuity and a prolonged period of uncertainty. Fram Search has extensive experience helping firms plan for leadership changes, whether through targeted succession planning or urgent executive search.

If your firm is thinking about its leadership pipeline, or if you find yourself urgently needing to replace a senior manager, we’re here to help. Now is the time to put a plan in place—before you need to.