Welcome to the NED Capital Podcast.Being appointed as a Non-Executive Director can look very different depending on the organisation. A NED joining the board of a privately owned manufacturing business will face a different governance environment from someone joining the board of a bank, insurer, asset manager or other FCA-regulated financial services firm.One of the most important differences is the regulatory framework surrounding the appointment.So, do Non-Executive Directors need FCA approval?The short answer is: some do, depending on the role and the regulatory status of the firm.Understanding that distinction is important for both boards making appointments and individuals considering their first regulated NED role.Why FCA Approval MattersThe Financial Conduct Authority has a particular interest in who occupies senior positions within regulated financial services businesses.The Senior Managers and Certification Regime, or SM&CR, is designed to establish clearer individual accountability within regulated firms. Certain senior roles are designated as Senior Management Functions, and individuals performing those functions generally require regulatory approval before taking up the position.For a board, this means that appointing a NED can involve considerably more than agreeing a candidate and issuing an appointment letter.The board needs to consider the individual's suitability, experience, independence and ability to perform the responsibilities attached to the role.This is one reason why FCA Regulated Board Governance requires a more specialised approach than a conventional NED appointment.Not Every NED Is Automatically an FCA-Approved PersonIt is important not to assume that every NED sitting on the board of an FCA-regulated company requires exactly the same approval.The regulatory position depends on the firm's regulatory status and the particular function the individual will perform.Certain board positions are specifically designated as Senior Management Functions. These can include the Chair, depending on the firm's circumstances, as well as certain committee chairs and the Senior Independent Director.For example, financial services board appointments can include SMF9 for the Chair, SMF10 for the Chair of the Risk Committee, SMF11 for the Chair of the Audit Committee and SMF14 for the Senior Independent Director.That means the question should not simply be:“Is this person a NED?”It should be:“What role will this NED actually perform within this particular regulated firm?”That distinction can fundamentally change the appointment process.The Difference Between a Normal NED Search and a Regulated AppointmentFor a conventional NED search, a board may focus heavily on sector experience, strategic capability, independence, financial literacy and boardroom experience.Those factors remain important in financial services.But they are joined by another layer of considerations.The candidate may need to demonstrate an understanding of the regulatory environment, appropriate governance experience and the ability to exercise effective oversight in an environment where individual accountability is much more explicit.The candidate also needs to understand that being a NED of a regulated financial institution is not simply about attending board meetings and offering occasional strategic advice.There is genuine responsibility attached to the role.Fitness and ProprietyWhere regulatory approval is required, the individual's fitness and propriety becomes an important part of the appointment.The regulator considers whether the person is suitable to perform the relevant senior function. This includes