At a typical FCA-regulated asset manager, the portfolio manager running a strategy that holds a substantial part of the firm's assets under management can meet the Section 250 senior-manager test without holding any Senior Management Function. This guide maps where s.250(3) reaches beyond the SM&CR perimeter at investment firms, including the sub-adviser dimension.
How does SM&CR apply at FCA solo-regulated asset managers?
Section 250 of the Crime and Policing Act 2026 came into force on 29 June 2026, and asset managers are among the firms where its reach is least intuitive. Most investment managers are FCA solo-regulated and run the three SM&CR parts: the Senior Managers Regime, the Certification Regime, and the conduct rules that cover almost everyone else. That gives them a familiar set of Senior Management Functions (SMFs), typically the chief executive, the executive directors (SMF3), the compliance oversight function and the money laundering reporting function, plus a population of certified staff who could cause significant harm.
This is general information, not legal advice. Consult a qualified solicitor or FCA-regulated compliance adviser for your firm's specific situation.
The SM&CR population at an asset manager is shaped by what the FCA cares about: the regulated activity of managing investments, and the named individuals accountable for it. That is the right lens for FCA supervision. It is the wrong lens for Section 250, which asks a different and broader question.
Where does s.250(3) reach beyond the SM&CR perimeter?
Section 250(3) defines a senior manager as an individual who plays a significant role in the making of decisions about how the whole or a substantial part of the firm's activities are to be managed or organised, or in the managing or organising of the whole or a substantial part of those activities. Note the words: all activities, not only the regulated activity of managing investments. At an asset manager, "a substantial part of the activities" maps naturally onto the firm's strategies, funds and operating functions.
There is a second point that matters more here than at most firms. Under s.250(1), where a senior manager commits any criminal offence under UK law within the actual or apparent scope of their authority, the firm commits it too. The trigger is any offence, not only offences created by the 2026 Act. That is what makes the question of who counts as a senior manager worth getting right.
The gap appears wherever real authority over a substantial part of the business sits with someone the SM&CR never required to be approved. Portfolio managers, the chief investment officer, the head of investment strategy, the head of distribution: each can be running a substantial part of the firm while holding, at most, a certified function. The rest of this guide works through the roles most often missed.
Are portfolio managers and fund heads in scope?
This is the exposure specific to investment firms. A portfolio manager who runs a strategy or fund holding a substantial share of the firm's assets under management (AUM) is, on the face of s.250(3), playing a significant role in managing a substantial part of the firm's activities. Managing client capital is the firm's core activity. Yet portfolio managers are frequently certified rather than SMF-approved, because the SM&CR does not require an SMF for every person who runs money.
The assessment turns on scale and authority. A portfolio manager running a flagship fund that represents a meaningful fraction of AUM is a strong candidate. One of twenty managers each running a small sleeve of a diversified book is weaker. The head of a fund family or asset class, who sits above individual managers and directs how that whole part of the business is run, is stronger still. None of this is visible from the FCA register alone.
What about the CIO and head of strategy?
The Chief Investment Officer sets the firm's overall investment approach and usually has authority over how the entire investment side of the business is organised. Where the CIO is not already an executive director (SMF3), they are a strong Section 250 candidate. Few roles map onto "managing a substantial part of the activities" as cleanly as the person responsible for the firm's whole investment process.
The head of investment strategy or research is a closer call. In some firms they exercise comparable influence over how capital is deployed. In others they are advisory, informing decisions taken by others. That distinction is exactly what the functional test is for. An advisory strategist who does not decide or direct is a weaker candidate than a CIO who owns the process. Assess each on what they actually do, and write down the reasoning.
How do sub-advisers and delegated managers fit in?
Asset managers rarely operate alone. Where a firm delegates portfolio management to a sub-adviser, or acts as one for another manager, a counterparty dimension opens up alongside the internal analysis. A sub-adviser managing a substantial part of your funds is performing a significant role in a substantial part of your activities through its own people, so whether those individuals belong in your risk picture is a live question.
The practical approach is to ask significant counterparties to confirm in writing that they have run their own Section 250 analysis, and to keep that confirmation in your evidence. A sub-adviser running a large mandate is exactly the kind of significant counterparty that warrants the request. The harder, separate question of whether a delegated manager's individuals could be treated as your own senior managers is one we take up in the outsourcing guide.
How do you run the gap analysis at an asset manager?
Start from the FCA register extract to establish who is already SM&CR-covered. Then apply the s.250(3) functional test to the full senior population, including the portfolio managers, the CIO and the divisional heads who run substantial parts of the business without an SMF. For each person, record the verdict, the reasoning (which strategy, what share of AUM, what authority), and a confidence level of High, Medium or Low.
That record is what turns an opinion into evidence. From a completed gap analysis you can send declarations to the individuals you have flagged, collect their signed responses, and assemble the lot into a board evidence pack. A PDF/A-3B output, with the underlying audit trail embedded and hashed, supports the authenticity, integrity and chain of custody a court would assess if it ever had to. The format does not make anything admissible on its own, but it is built to stand up.
The specific risk at asset managers is treating "who manages investments" as a regulated-functions question answered by the register. It is not. The register tells you who the FCA approved. The functional test tells you who is actually running a substantial part of the firm. At an investment manager, the gap between the two is usually a list of the people closest to the money.
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- Crime and Policing Act 2026, s.250www.legislation.gov.uk/ukpga/2026/20/section/250
- FCA — Senior Managers and Certification Regimewww.fca.org.uk/firms/senior-managers-certification-regime
- FCA Registerregister.fca.org.uk/