Skilled Persons Reviews (S166)
Under s166 of FSMA, the FSA has the power to require a firm to appoint a Skilled Person to produce a report on specified matters. The Skilled Person must be independent to the firm and normally reports directly to FSA, as well as the firm. The FSA uses s166 appointments as both a supervisory tool and an enforcement tool.
The FSA will issue a firm with a requirement notice outlining the work the Skilled Person will need to undertake, the timescales for completion and the reporting requirements. Skilled Person appointments normally centre on a review of some form. This might involve a review of past business for a specific business area or type of business (for example, pension transfers or small cap stocks), or it could focus on systems and controls, either generally or for specific areas. It is also possible that corporate governance arrangements may be covered by a review.
The focus of reviews is often to confirm whether there is an issue for a specific area. The FSA is likely to already have some concerns and evidence of issues and will want the Skilled Person to investigate and provide an opinion as to the severity and magnitude of the issue.
Alternatively, FSA may appoint a Skilled Person to assess the remedial action taken by a firm to address concerns previously raised by FSA. FSA can also request that a Skilled Person is used to conduct a past business review to assess the level of any detriment and redress required.
Bovill has experience of conducting s166 appointments, both past business reviews and systems and controls reviews. The role of a Skilled Person is an independent one, and requires high evidential standards and strong project management to ensure both the firm and the FSA remain fully informed as to progress. The whole process normally involves initial, progress and final meetings – often with all three parties involved. Ensuring that FSA's requirements are met and managing the relationship with both FSA and the firm is a critical part of the process.
If FSA have requested you appoint a Skilled Person, or indicated that they might be considering doing so, please contact us to discuss how we could help.