As part of our How to series, we thought to release a brief guide on what to do when you are required to appoint a Skilled Persons by the regulator.
What is a Skilled Person Review?
The s166 Skilled Person Report refers to the use of a supervisory tool found in s166 of FSMA, which gives the FCA power to require any regulated firm or a member of its group, to provide it with a report by a Skilled Person.
The FCA commissions the report and the firm concerned pays for a Skilled Person to produce it.
The Skilled Person provides both the required resources and necessary expertise to review areas of concern identified within a firm and/or the effectiveness of remedial action a firm has taken.
There are two types of Skilled Person review:
S166 Skilled Persons Report
S166A: Skilled Person Information Exercise
A Skilled Person Report can be on any matter that is reasonably required by the FCA in connection with the use of its regulatory functions under the Act.
You will normally be expected to nominate the Skilled Person, although the FCA has the power to nominate or contract directly with the Skilled Person. Whichever option is taken, the FCA must formally approve the Skilled Person's appointment.
When the FCA may commission a Skilled Person Review
The Skilled Person Review may be used for the following purposes:
for diagnostic purposes, to identify, assess and measure risks;
for monitoring purposes, to track the development of identified risks, wherever these arise;
in the context of preventative action, to limit or reduce identified risks and so prevent them from crystallising or increasing; and
for remedial action, to respond to risks when they have crystallised.
When would a skilled person review be used? When the FCA requires an independent opinion to support a view or theory held by it: the FCA doesn't have the appropriate level of resources internally:
the estimated costs and timescales required to conduct the Skilled Person Review are proportionate to the regulatory risk being mitigated or benefits obtained by the firm from the review
the regulatory risk is such that the FCA require timely intervention and rectification and doesn't believe the firm is in a position to do this without independent third-party support
Skilled Person
If you have any questions on the Skilled Person process or what you will need to do, reach out to our expert team. We are here to help you every step of the way.
Please note, that we have released a guide on Preparing for an FCA visit which should provide more detail on how to adequately prepare your team for the regulatory visit.