Regulator cracking down on financial crime

NEWS RELEASE: A recent Freedom of Information request from financial regulation consultancy Bovill reveals the number of skilled person reviews issued by the Financial Conduct Authority in relation to financial crime have been increasing year on year since 2017. This comes as the FCA’s latest Business Plan published yesterday, highlights the regulator’s desire to crack down on problem firms.

Section 166 gives the FCA the power to obtain a view from a third party (skilled person) about aspects of a regulated firm’s activities if they are concerned. The increase appears to have slowed in the last year, likely due to temporary Covid-19 and resourcing issues, but overall the trend suggests the regulator is cracking down on an area which it views as being increasingly a problem.

Rupi Christopher, Practice Lead of Fraud and Financial Crime at Bovill, commented:

“The data from the FCA reflects a wider trend we are seeing, which was reiterated in yesterday’s Business Plan, of the regulator taking swift decisive action when it identifies a problem. It is also indicative of a ‘data-driven’ approach, something which the FCA has highlighted as a priority in their 3-year Strategy.

“We have seen an increase in the number of reviews requested of our clients as well as those we’ve been asked to carry out as a ‘skilled person’ in the financial crime arena. It is clearly time for firms to sit up and pay attention when it comes to their financial crime and fraud monitoring and reporting.”

Although there was a 55% increase in volume of reviews commissioned between the financial years (FYs) 2017-2018 to 2020-2021, there was a decrease during the FY 2021-2022. In part, this is due to the fact that the financial year was not complete when the FOI was sent, but could also indicate a slowing down of activity from the regulator.

Rupi Christopher, Practice Lead of Financial Crime and Fraud at Bovill, continued:

“This slowdown in activity from the FCA in the last financial year is probably a result of an amalgamation of factors including a lack of readiness to work from home during the pandemic, as well as problems with resourcing. However, we view this to be a temporary blip, and expect Section 166s to rise to over 20 cases in the next financial year, particularly as the FCA announced yesterday it will be measuring itself annually against published outcomes and targets.”

According to the data, the Retail Banking and Payments sector incurred the highest volume of skilled person reviews overall, at over 50% of the total volume in the last five years. The volume of cases has also been increasing year on year in this sector between 2017-2018 and 2020-2021. The payments and e-money market has been growing rapidly in the UK and is attracting increased regulatory attention in other areas, including the expansion of the Senior Managers Certification Regime (SMCR) this year.

Rupi Christopher, Practice Lead of Financial Crime and Fraud at Bovill, continued:

“The FCA is particularly focused on the Retail Banking and Payments sector given the rapid expansion of this sector and the emergence of challenger banks, as well as the potential for consumer harm – a key focus in this year’s Business Plan. If firms are issued with a skilled person review in this area we recommend acting quickly to source and prepare the relevant reporting documents.”




Notes to editors

Freedom of Information: Right to know request

Thank you for your email of 2 December 2021, in which you asked:

For each year from 2017-2021 inclusive:
a) In how many cases did the FCA use the section 166 power to commission a skilled person review in relation to financial crime?

b) Please provide a breakdown for the FCA sectors in which these cases occurred.

2. In how many of the cases in (1.) did the FCA appoint the skilled person firm?

3. What is the aggregate cost incurred by regulated firms for section 166 work?

We have processed your email in line with the provisions of the Freedom of Information Act 2000 (FOIA) and our response is below.

Questions 1 (a) and (b)
The requested information can be found in the table below.

Question 2
The skilled person was appointed by the FCA for one of the skilled person reviews in the above table

Question 3
The aggregate cost for the financial crime related reviews undertaken during the relevant period is £21.7m



For further information, please contact:

Polly Barton – Bovill
+44 (0)20 7620 8440

Tabitha Adams – Luther Pendragon
+44 (0)7500 013062


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