Core, enhanced or limited scope: which SM&CR category is your firm

A core SM&CR firm is a solo-regulated firm that does not meet the enhanced criteria and does not fall into limited scope. The FCA's categorisation page says that Core is the default for firms outside the other two categories, and that Core firms "have to comply with the baseline requirements" (SM&CR categorisation for solo-regulated firms). Core is the category that applies when the enhanced and limited scope tests do not.

The three categories

Solo-regulated firms fall into one of three categories under the Senior Managers and Certification Regime. The FCA is clear that each firm is responsible for working out its own category from the rules, and that the category determines how the regime applies.

What makes a firm enhanced

The FCA lists six routes into the enhanced category. A firm is enhanced if it meets any one of them. These are the figures as changed on 24/04/2026:

• Assets under management of £65 billion or more, calculated as a three-year rolling average.
• Total intermediary regulated business revenue of £45 million or more a year, calculated as a three-year rolling average.
• Consumer credit revenue of £130 million or more, calculated as a three-year rolling average.
• A mortgage lender or administrator (not a bank) with 10,000 or more regulated mortgages outstanding at the latest reporting date.
• Certain significant firms, as the Handbook defines them.
• CASS Large firms.

The rolling-average figures matter for growing firms. A firm can be close to a threshold in one year and clear of it the next, so run the test on the latest reporting data rather than a single year's figures. The FCA is consulting on further SM&CR changes, so treat the categorisation page as the reference for the current figures.

Limited scope firms and sole traders

Limited scope is the category for firms the FCA treats as carrying fewer obligations. The FCA's page states that "A sole trader is a limited scope firm", and that other firm types can qualify if certain conditions are met. The Handbook sets out the limited scope rules and criteria.

For a sole trader, the page makes two points that matter for staffing:

• A sole trader without employees does not need SMF29 (Limited scope).
• A sole trader must hold SMF29 if they employ anyone who must be approved or who falls under the Certification Regime.

The page also says SMF16 (Compliance oversight) may be required depending on the firm's permissions. Check that point against your own permissions rather than assuming it does or does not apply.

Which SMFs each category needs

The FCA Handbook tables set out which functions can apply to each type of firm. The rows below compare the core table with the table for sole traders, for the UK functions most small firms ask about. Read the table for your category in full: a tick means a function can apply, not that every firm in the class needs it.

The sole trader table looks long, but in practice it is much shorter. The FCA's categorisation page says that neither the governing SMFs nor the Certification Regime apply to a sole trader themselves, and that a sole trader without employees does not need SMF29. Other limited scope firms, such as credit firms with limited permission, use a separate and shorter table built around SMF29. Enhanced firms follow a longer list, so if you move from core to enhanced, that list is what you need to plan for.

Changing category

A firm can opt up to a higher category by submitting a Form O on Connect. It cannot pick and choose which requirements apply: opting up means the requirements of the higher category apply in full. Revoking an opt-up returns the firm only to its original category. Opting up is a deliberate step, so it is worth deciding before you appoint SMFs under the higher regime. For the wider context of how the regime is changing, see our note on the SM&CR review for solo-regulated firms.

How to work out your category

1. Check the six enhanced criteria against your latest reporting data, using the three-year rolling average where it applies.
2. If you are not enhanced, check whether limited scope applies. A sole trader is limited scope, and other firm types need to meet the conditions the Handbook sets out.
3. If neither applies, you are core.
4. Read the Handbook table for your category and permissions, and map each SMF to a named person.
5. Record the category and the reasoning on file, and recheck it when your reporting figures or the FCA's thresholds change.

Our explainer on the SM&CR regime overview covers the wider structure, and the SM&CR tool helps with first-pass mapping. Where the SMF list is in question for a small firm, the choice between SMF16 and SMF17 is often the hardest part. We cover that in SMF16 and SMF17 in a small firm.

How MEMA can help

If you are not sure which category your firm sits in, or which SMFs follow from it, we can map it against your permissions and your latest figures. Our SM&CR implementation support covers the category decision, the SMF map and the statements of responsibilities that go with it.