Small authorised firms have a genuine problem: the regulatory obligations are real, they are dated, and they do not fill a week. A firm with fifteen staff and a MIFIDPRU permission needs someone who can calculate own funds, submit returns and — if it holds client money — oversee a daily reconciliation, and it cannot justify a full-time Financial Controller with that experience. Fractional is the obvious answer and it is frequently the right one. It also has limits that matter more here than in any commercial setting, and this guide is honest about both.
Why the model fits
Three reasons the arrangement works well in regulated firms.
The obligation is real but bounded. A quarterly return, a monthly capital calculation and a documented ICARA is genuine work and it is not five days a week at a small firm. Paying for a full-time regulated FC at £95,000 to do two days of regulated work is exactly the mismatch fractional exists to solve.
The scarcity works in your favour. Fractional practitioners with CASS, safeguarding or prudential experience — on top of the baseline ICAEW, ACCA or CIMA qualification — are thin on the ground, but the ones who exist have usually seen several firms — which means pattern recognition a first-time permanent hire will not have. Our guide to the regulated finance hiring market covers the supply picture.
And the work is largely review. Financial control compresses because much of it is checking rather than producing — and the regulatory half is disproportionately review, judgement and documentation.
Where the model has real limits
This is the part that gets skipped in most discussions of fractional finance, and in regulated firms it matters.
Daily obligations do not compress. Where the firm holds client money under CASS or safeguards relevant funds, the reconciliation is daily. A fractional FC present on Tuesdays and Thursdays cannot perform it — somebody in the business does, and the FC reviews. That is a workable arrangement, and it means the fractional appointment is the oversight rather than the operation. Our guide to CASS oversight versus operations covers the split.
Personal accountability sits awkwardly with part-time presence. Where a prescribed responsibility is allocated under the Senior Managers and Certification Regime, the individual holding it is answerable in full regardless of how many days a week they attend. Some fractional practitioners will accept an SMF; many will not, and firms should establish this early rather than at offer stage.
Something urgent will arrive on a day they are not there. A breach, a supervisory query, a shortfall. The arrangement needs an agreed escalation route rather than an assumption.
And a firm with no other regulatory expertise is exposed. A fractional FC visiting twice a week, in a firm where nobody else understands the obligations, is a single point of failure who is also frequently absent.
SMF roles: what a fractional FC can and cannot hold
A Senior Manager Function needs FCA approval before the individual starts, and the FCA can take up to three months to decide a complete application — so an SMF cannot be a stop-gap. Part-time SMF holders are permitted, but the firm must show the individual has enough time for the role. In practice:
- SMF16 (Compliance Oversight) and SMF17 (MLRO) are not finance roles, and a fractional FC should not be asked to absorb them. Specialist fractional SMF16/17 appointments are handled by our sister firm SMF Capital.
- SMF2 (Chief Finance Function) applies in enhanced firms, banks and insurers and is a director-level appointment; those searches run with FD Capital.
- The CASS prescribed responsibility must sit with an approved senior manager; the fractional FC usually supports that person with oversight and evidence rather than holding it.
Our guide to SM&CR for finance teams explains how responsibilities are mapped.
The returns timetable a fractional FC must cover
All FCA returns are submitted through RegData, which replaced GABRIEL. The engagement days should be planned around the firm’s reporting calendar, not the other way round:
- MIFIDPRU investment firms: quarterly capital and liquidity returns (MIF001 and MIF002) and an annual ICARA questionnaire (MIF007), under the Investment Firms Prudential Regime.
- ICARA: the Internal Capital Adequacy and Risk Assessment must be reviewed at least annually and approved by the governing body; a fractional FC can own the model and the paper.
- CASS firms: a monthly Client Money and Asset Return for medium and large CASS firms, plus the annual CASS audit (see the FCA’s client money and assets pages).
- Payments and e-money firms: periodic capital and safeguarding reporting, with strengthened safeguarding requirements adding more frequent reconciliation, reporting and annual safeguarding audits for most firms in scope.
More detail is in our guides to regulatory reporting through RegData, regulatory capital and the ICARA and safeguarding for payments and e-money firms.
Need a regulated fractional FC? — 0204 553 8893
We place fractional Financial Controllers with CASS, safeguarding and MIFIDPRU experience. Same working day response; fractional candidates usually within days.
When it works well
Four configurations where the arrangement is genuinely strong.
The firm has operational capability and needs oversight. Someone internal performs the daily reconciliation; the fractional FC reviews it, owns the calculation, handles the returns and manages the audit. This is the best fit by a distance, and it is also better governance than one person doing everything.
The regulatory workload is genuinely periodic — quarterly returns, an annual ICARA refresh, monthly capital monitoring — with no daily client money obligation. Common in firms that do not hold client money, and the model fits cleanly.
Building the function before a permanent hire. A newly authorised firm using an experienced fractional FC to design the process, document it and specify the permanent role. Our guide to hiring finance for a newly authorised firm covers that sequence.
Or alongside an existing commercial FC — the firm has a capable Financial Controller without regulatory experience, and buys a day a week of specialist oversight rather than replacing them. An under-used arrangement and frequently the best value available.
When to hire permanently instead
Where client money is material and the firm has no operational capability. Someone has to perform the daily reconciliation, and if nobody internal can, the requirement is full-time.
Where an SMF responsibility must sit with the finance lead and no fractional practitioner will accept it.
Where the firm is growing fast enough that the regulatory workload will fill a week within a year. Appointing fractionally and re-recruiting twelve months later costs more than hiring correctly once.
And where supervisory attention is elevated — a firm under increased engagement needs someone present, not someone reviewing. Our Financial Controller for FCA-regulated firms page covers permanent searches, typically shortlisted within one to two weeks.
What to test before appointing
Beyond the standard fractional questions, five that are specific to this.
1. Which regimes have you actually worked under? CASS 5, 7 or 15, safeguarding, MIFIDPRU — they are different jobs, as our guide to CASS 7 versus CASS 15 sets out.
2. Will you accept an SMF responsibility? Ask directly and early.
3. How do you oversee a daily reconciliation you do not perform? Look for a described method — sampling, exception review, ageing analysis — rather than a general assurance.
4. How many other regulated clients do you have, and what would you do if two had an issue in the same week? Capacity honesty matters more here than in commercial engagements.
5. What would you check in your first week? Experienced regulated practitioners start with the permissions, the client money position and when the calculation was last independently reviewed.
Our guides to hiring regulatory experience and regulated versus commercial FC cover the wider assessment.
What it costs
| Arrangement | London | Regional UK |
|---|---|---|
| Fractional FC, regulated — day rate | £550–£750 | £420–£640 |
| Retainer, 1 day/week | £2,420–£3,250/month (£29k–£39k a year) | £1,830–£2,750/month |
| Retainer, 2 days/week | £4,330–£5,670/month (£52k–£68k a year) | £3,250–£4,830/month |
| Specialist oversight only (0.5 day/week) | £1,210–£1,625/month | £920–£1,380/month |
| Permanent regulated FC (fully loaded) | £102k–£138k | £89k–£118k |
Regulated engagements sit towards the top of the general fractional FC ranges, and practitioners with deep CASS, safeguarding or prudential experience can command 15–25% above the commercial equivalent, reflecting the same scarcity that drives the permanent premium. The half-day oversight arrangement in row four is the one most firms overlook and frequently the best value — it buys the specialist judgement without duplicating capability the firm already has. Wider rates are in our fractional FC rates guide and regulated-firm salary guide.
Frequently asked questions
Can a fractional FC submit our FCA returns?
Yes. Preparing and submitting RegData returns, running the capital calculation and owning the ICARA are core fractional work, provided the days are scheduled around the reporting deadlines.
Can a fractional FC perform our daily client money reconciliation?
Not on the days they are absent. Someone internal performs it; the fractional FC reviews it, investigates breaks and evidences oversight.
Who handles SMF16, SMF17 and SMF2 appointments?
SMF16 and SMF17 searches run through SMF Capital, and SMF2 and other director-level finance roles through FD Capital, both part of FD Capital Group alongside Accountancy Capital.
Adrian Lawrence FCA — Founder, Accountancy Capital
Fellow of the ICAEW | Chartered Accountant holding an ICAEW practising certificate | Part of FD Capital Group
A former listed-company Finance Director with a BSc from Queen Mary College, University of London, Adrian’s advice to small authorised firms is that daily obligations do not become part-time because the Financial Controller is. The arrangement our recruitment team recommends most often is an internal person doing the operational work with an experienced fractional FC overseeing it — better governance than one person doing everything, at less than a permanent hire.
Related Pages and Resources
Regulated Finance
Fractional and permanent appointments.
→ FCA-Regulated Finance Recruitment
What Cannot Compress
Client money, safeguarding and returns.
Building the Function
From authorisation to a working function.
→ Building a Regulated Finance Function
Benchmarks
Fractional rates and permanent bands.
Small authorised firm needing regulated finance capability? — 0204 553 8893
Same working day response on every brief. Fractional and interim candidates within days; permanent shortlists typically within one to two weeks. Fees agreed in writing before a search starts. Email recruitment@accountancycapital.co.uk.