For most small and mid-sized brokers, the compliance officer and MLRO is the most expensive regulatory hire they will make, and the one they are least sure how to price. A permanent Head of Compliance can cost six figures once employment costs are added. A fractional appointment can cost a fraction of that, but day rates vary widely and the number of days a firm actually needs is rarely obvious.
This article sets out what brokers typically pay for a fractional compliance officer and MLRO, what drives the rate, the costs firms forget, and how the numbers compare with a permanent hire.
What “fractional” means for a broker
A fractional compliance officer is an experienced professional who holds your firm’s compliance oversight function, SMF16, and often the money laundering reporting function, SMF17, on a part-time basis. They are approved by the FCA at your firm under the Senior Managers and Certification Regime, sign a Statement of Responsibilities, and carry the same personal accountability as a full-time holder. The difference is that they work a set number of days a month, usually alongside one or two other firms.
That is different from an outsourced compliance consultancy. A consultancy can run monitoring, file checks and financial promotions reviews, but it cannot hold the Senior Manager Function. Someone at your firm must be named and approved. SMF Capital’s guide to what you can and can’t outsource explains where that line sits, and its pages on part-time compliance officers and fractional MLROs describe how those appointments are structured.
Typical day rates
Rates depend on the candidate’s experience, the firm’s sector and risk profile, and whether the role combines compliance oversight with MLRO duties. As a guide, FD Capital’s SMCR compliance recruitment data puts experienced fractional Heads of Compliance at around £600 to £1,000 a day and fractional MLROs at around £600 to £1,100 a day.
| Role | Typical fractional day rate | Typical permanent salary |
|---|---|---|
| Compliance officer (SMF16) | £600 – £1,000 | £75,000 – £130,000 |
| MLRO (SMF17) | £600 – £1,100 | £90,000 – £150,000 |
| Combined compliance officer and MLRO | Usually towards the upper end of the compliance range | Varies with firm size and risk |
Source: FD Capital SMCR compliance recruitment data. SMF Capital’s SMF and compliance salary guide breaks the figures down further by firm type, and its analysis of what SMF roles actually pay looks at the gap between advertised and agreed rates.
What pushes a rate up or down
Sector and products
A general insurance broker selling straightforward personal lines products sits at the lower end of the range. A broker arranging investments, pensions or life products, or one placing complex commercial risks, will pay more, because the candidate pool with the right experience is smaller and the regulatory risk is higher.
Whether the role includes MLRO duties
The MLRO carries personal criminal exposure as the firm’s nominated officer, and experienced MLROs price that in. If your firm is within the Money Laundering Regulations and needs a combined SMF16 and SMF17, expect to pay more than for compliance oversight alone. For firms where financial crime is the dominant risk, our sister site MLRO Capital runs dedicated MLRO searches.
Appointed representatives and client money
If your firm acts as a principal to its own appointed representatives, or holds client money, the compliance workload increases sharply. That means more days, and often a more senior candidate.
Remediation and regulatory attention
A firm that is under a skilled person review, remediating past advice or responding to a Dear CEO letter needs someone who has done it before. Those candidates command higher rates, and the engagement is usually more intensive at the start.
Location and attendance
Most fractional compliance work can be done largely remotely, with regular on-site days. Insisting on frequent attendance, particularly in central London, narrows the pool and can push rates up.
How many days does a broker need?
This matters more than the day rate. A good candidate at a fair rate, working too few days, leaves the firm exposed. As a starting point:
| Firm profile | Typical commitment |
|---|---|
| Small broker, simple products, under 10 staff | 2 to 3 days a month |
| Broker with 10 to 30 staff, or combined SMF16/17 | 1 day a week |
| Broker with its own appointed representatives or client money | 1.5 to 2 days a week |
| Firm in remediation or preparing for authorisation | 2 to 3 days a week at first, reducing later |
These are starting points, not rules. The right answer comes from the firm’s compliance monitoring plan: how many files need checking, how many promotions need approval, how many complaints arrive and how much board reporting is required. SMF Capital’s guide to compliance monitoring is a good way to size the work.
Fractional versus permanent: a worked comparison
Take a broker of around twenty staff that needs a combined compliance officer and MLRO.
Fractional, one day a week
At £800 a day for roughly 46 working days a year, the annual cost is around £36,800 before VAT. At two days a month, it falls to around £19,200.
Permanent, full-time
A permanent compliance officer and MLRO on an £85,000 salary costs considerably more than £85,000. Employer’s National Insurance at the current 15% rate adds around £12,000. Employer pension contributions, holiday, benefits and a recruitment fee push the first-year cost well above £100,000.
The fractional option is clearly cheaper for a firm of that size. The question is whether one day a week is enough. If the honest answer is that the firm needs someone three or four days a week, a permanent hire may be better value and gives the business more day-to-day presence.
The costs brokers forget
VAT
Most fractional compliance officers invoice through their own limited company and charge VAT. HMRC treats insurance intermediary services as exempt from VAT, as set out in its Insurance VAT Notice 701/36, and many credit and financial intermediary services are exempt under its finance VAT notice. Brokers making mainly exempt supplies often cannot recover the VAT they are charged. For a firm in that position, the real cost of a £800 day is £960. Check your own VAT position with your accountant before comparing options.
IR35
If your firm is small under the Companies Act thresholds, the fractional compliance officer’s own company decides whether the off-payroll working rules apply. If your firm is medium or large, you must make the status determination yourself and issue a status determination statement. Either way, a properly structured fractional engagement, with the individual working across several firms and controlling how they deliver the work, is usually outside IR35, but it needs to be assessed rather than assumed. HMRC’s guide to understanding off-payroll working (IR35) sets out who decides and how.
The outsourced support layer
Many brokers pair a fractional compliance officer with an outsourced provider for file checking. Budget for both, and make sure the compliance officer, not the provider, owns the monitoring plan.
Cover for absence
A fractional compliance officer who is unavailable for two weeks still needs someone to receive suspicious activity reports, approve urgent promotions and handle regulatory contact. Agree cover arrangements, and their cost, at the outset.
The cost of getting it wrong
An unsuitable appointment can mean a second search, a delayed approval or a regulatory review. If your compliance officer leaves suddenly, SMF Capital’s urgent SMF replacement and interim compliance officer and MLRO services can provide cover under the 12-week rule, but interim cover at short notice usually costs more than a planned appointment.
What you should get for the money
A fractional compliance officer and MLRO is not just a name on the FCA register. At a minimum, the engagement should include:
- A risk-based compliance monitoring plan, agreed with the board and reviewed at least annually
- Regular monitoring and file review, either directly or by overseeing an outsourced provider
- Financial promotions approval within agreed turnaround times
- Complaints oversight and root cause reporting
- The firm’s Consumer Duty outcomes monitoring and annual board report
- For the MLRO role: the business-wide risk assessment, suspicious activity reporting decisions and the annual MLRO report
- Written board reports, with clear escalation of breaches and risks
- A named route to reach them between scheduled days
If a candidate cannot describe how they would deliver each of those within the days on offer, either the days or the candidate are wrong.
Agreeing the engagement
Put the terms in writing. A good fractional engagement letter sets out the days a month or week, the day rate and how extra days are charged, the responsibilities the individual will hold, response times between scheduled days, notice periods on both sides, and how cover works during absence. It should sit alongside the individual’s Statement of Responsibilities, not replace it. SMF Capital’s Statement of Responsibilities template is a useful starting point.
Plan for growth too. Many brokers start with a fractional compliance officer and MLRO, then split the roles or move to a permanent hire as they grow. SMF Capital’s article on when to split a combined SMF16/17 role sets out the signs that point to that change.
How we can help
Broker Recruit’s searches are delivered by SMF Capital, which places fractional, interim and permanent compliance officers and MLROs across FCA-regulated firms. We can help you size the role, benchmark the rate against current market data, and introduce candidates who have done the job at firms like yours, tested for regulatory readiness before you meet them. Every search is led personally by Adrian Lawrence FCA.
See SMF Capital’s pages on compliance officer recruitment (SMF16), MLRO recruitment (SMF17) and combined compliance officer and MLRO recruitment, or tell us about your hire and we will come back to you the same working day.
