Key Takeaways
A skilled person review is an independent assessment commissioned by the FCA under section 166 of the Financial Services and Markets Act 2000, where an external expert examines specific aspects of a regulated firm’s business. The FCA Skilled Person Panel is the mechanism that enables this process efficiently.
- The FCA Skilled Person Panel is a pre-vetted list of independent professional services firms, including compliance firms, accountants, lawyers and other sector specialists, approved by the Financial Conduct Authority and the Prudential Regulation Authority for directly commissioned section 166 reviews.
- Under section 166 of the Financial Services and Markets Act 2000, the FCA can appoint a third party, such as compliance firms, accountants or lawyers, to review and report on areas of concern in a regulated firm, which may lead to required improvements or enforcement action.
- The appointment of a skilled person involves a formal contract process between the FCA or the regulated firm and the skilled person firm.
- Regulated firms can use panel firms or propose alternative skilled person firms for FCA approval when the firm is responsible for appointment.
- Skilled person reviews typically focus on areas such as financial crime, market abuse, governance, systems and controls and customer outcomes.
- In 2023/24, the FCA commissioned 83 skilled person reviews, up from 47 in 2022/23, signalling more proactive regulatory oversight.
- Complyport is appointed to 8 Regulatory Category Lots on the FCA Skilled Persons Panel and can support firms through the full lifecycle of a skilled person review.
Introduction: Skilled Person Reviews and the FCA’s Use of Experts
Under section 166 of the Financial Services and Markets Act 2000, the FCA can appoint a third party to review and report on areas of concern in a regulated firm. This power allows the regulator to obtain an independent view of a firm’s systems, controls, conduct, or risk management frameworks without immediately pursuing enforcement action. Regulators use these powers to ensure firms comply with regulatory standards.
Section 166 reviews are a key supervisory tool used by the FCA when concerns exist regarding a firm’s risks, systems, or conduct. The regulator uses them for diagnostic purposes, monitoring identified risks and requiring proportionate recommendations for remediation. The process results in a skilled person report that informs the FCA’s supervisory decisions and may drive implementation of remediation plans.
The sharp increase in review activity, 83 reviews in 2023/24 compared to 47 in 2022/23, indicates that firms across the market should understand how this process works and how the FCA Skilled Person Panel supports it. When appointing skilled persons, firms should follow FCA guidance, specifically SUP 5.4 of the Handbook, to ensure proper compliance and effective appointment processes.
What Is the FCA Skilled Person Panel?
The Skilled Person Panel is the FCA’s pre-approved list of firms with specialist expertise from which it may select providers to carry out section 166 skilled person reviews. The FCA Skilled Person Panel is a pre-vetted list of independent professional services firms approved by the Financial Conduct Authority and the Prudential Regulation Authority.
The panel is structured into 12 subject categories known as “lots,” covering themes such as governance, financial crime, client assets, conduct of business, prudential risk and technology. Panel firms include compliance firms, accountants, lawyers and other sector specialists. The Skilled Person Panel serves as an objective third party, supporting the FCA’s mandate to protect consumers and maintain market integrity.
The current panel arrangements operate under a fixed-term framework. The Skilled Person Panel is effective from 1 April 2026 and will expire on 31 March 2030. The appointment of a skilled person involves a formal contract process, either between the FCA and the skilled person firm or the regulated firm and the skilled person firm, in line with procurement regulations. This procurement cycle ensures the FCA can access relevant material and expertise while maintaining quality controls.
Inclusion on the panel means a firm has passed FCA due diligence on capability, track record, resourcing and conflicts management. Complyport is appointed to 8 Regulatory Category Lots on the FCA Skilled Persons Panel, demonstrating broad range coverage across risk and compliance topics.
How Skilled Person Reviews Work in Practice
A typical skilled person review follows a structured process from initial FCA concerns through to delivery of the skilled person report and follow-on remediation.
Key stages include:
- FCA supervisory concerns: The regulator identifies issues through thematic work, regulatory reporting, or firm-specific events
- Requirement notice: The FCA issues a Draft Requirement Notice setting out scope and expectations
- Skilled person selection: Either the FCA appoints directly from the panel, or the firm nominates a suitable supplier. Firms must rely on their own due diligence when selecting a skilled person, as the FCA does not endorse individual panel members.
- Scoping and fieldwork: Detailed testing of the firm’s controls, file reviews, interviews and data analysis
- Reporting: Draft and final skilled person reports are prepared and shared with both the firm and FCA
- Implementation: Proportionate recommendations are actioned through remediation plans
The FCA may commission reviews covering financial crime systems, market abuse monitoring, client asset protection, governance and culture, or product oversight. The scope depends on the nature of concerns identified.
The regulated firm contracts with and pays for the skilled person review. This can be resource-intensive, requiring significant data extraction, customer file sampling and control testing. Outputs range from diagnostic assessments to detailed remediation plans, depending on scope agreed with the FCA at the outset. Failures identified during skilled person reviews can lead to extensive investigations and increased costs for firms. When external professionals are involved, it is important to preserve legal privilege to safeguard confidential legal advice and communications.
Skilled Person Selection and the Role of the Panel
The FCA can appoint a skilled person directly or approve a skilled person nominated by the regulated firm, allowing flexibility in the selection process. When the FCA appoints directly, it typically runs a mini competition among relevant panel firms in the appropriate lots. Firms must ensure compliance with FCA guidance, particularly SUP 5.4 of the Handbook, which outlines the requirements and expectations for the appointment process.
When the firm is responsible for appointment, it can propose a skilled person firm from the panel or an alternative supplier. Regulated firms can choose to source a supplier listed on the Skilled Person Panel, but they are not required to do so and may nominate any suitable supplier for consideration and approval. The FCA must still be satisfied with the choice under SUP 5.4 of the Handbook.
When appointing a skilled person, firms should consider technical capabilities, resources available, conflicts of interest and commercial aspects as part of the selection criteria. Accountants and lawyers are commonly appointed as skilled persons due to their sector expertise and ability to conduct specialized reviews. Additional considerations include:
- Experience with similar reviews
- Sector knowledge relevant to the firm’s business
- Understanding of FCA expectations
- Capacity to deliver within tight timelines
Complyport, as a skilled person firm on 8 FCA Regulatory Category Lots, is well-placed to be considered for reviews across governance, financial crime, market abuse, conduct risk and other themes.
What Does the FCA Skilled Person Panel Cover? (Lots and Specialisms)
The panel is divided into 12 thematic lots ensuring the FCA can draw on deep subject-matter expertise for each review. The Skilled Person Panel is used for directly commissioned s166 reviews and is divided into 12 subject categories known as lots. The panel includes compliance firms, accountants, lawyers and other sector specialists to ensure the appropriate expertise is available for each review.
Typical lot categories include:
- Governance, accountability, strategy and culture: Board-level decision-making, SMCR compliance, senior management accountability
- Controls and risk management frameworks: Internal control environment, risk identification, escalation processes
- Financial crime: AML, sanctions screening, KYC procedures, transaction monitoring
- Client assets: CASS compliance, segregation arrangements, reconciliation
- Conduct of business: Fair treatment, suitability, complaints handling, customer outcomes
- Prudential risk: Capital adequacy, liquidity, solvency for deposit-takers and insurers
- Adequate financial resources: Requirements for FCA solo regulated firms
- Technology and information management: Cybersecurity, operational resilience, data governance
- Market abuse and trading surveillance: Monitoring systems, suspicious transaction reporting
Panel lots also reflect emerging regulatory priorities such as consumer duty implementation and operational resilience. Complyport’s appointment to 8 Regulatory Category Lots means it can be selected for a wide variety of skilled person reviews, allowing continuity across different risk themes.
Implications for Regulated Firms
Understanding the FCA Skilled Person Panel matters to regulated firms across retail banking, lending, investment management, broking and payment services. A skilled person review creates significant operational demands.
Operational impact includes:
- Senior management time and attention
- Data collation and system access requirements
- Customer file sampling across multiple product lines
- Coordination across legal, compliance, risk and operations teams
Restrictions imposed because of skilled person reviews, such as halting onboarding or issuing notices to clients, can significantly impact client relationships, contractual obligations and overall business operations.
The findings from a Skilled Person review may inform regulatory actions by the FCA, including penalties or enforcement action. Outcomes can include voluntary requirements, own-initiative requirements, restrictions on new business, or formal enforcement investigations where serious failings are identified.
The costs of skilled person reviews have significantly increased, with many reviews now costing firms around £500,000 and larger investigations reported to exceed £3,000,000 due to broader and more complex scopes. While voluntary requirements may be seen as cost effective, relying solely on these measures can result in higher long-term costs if issues are not properly addressed, due to risks like scope creep and more complex investigations. Early engagement, realistic planning and constructive cooperation with the skilled person can achieve more proportionate recommendations and reduce the likelihood of follow-on reviews or potential enforcement action.
How Complyport Supports Firms Through Skilled Person Reviews
Complyport is a compliance and risk consultancy that also acts as a skilled person firm on the FCA Skilled Person Panel, appointed to 8 Regulatory Category Lots. This allows Complyport to be appointed as the skilled person itself or to support firms subject to reviews led by another skilled person firm.
Typical support services include:
- Pre-review readiness assessments
- Scoping input and challenge
- Documentation and data preparation
- Liaison with the skilled person and FCA
- Design and implementation of remediation plans
Complyport has experience in areas commonly covered by skilled person reviews, including financial crime frameworks, market abuse surveillance, governance and SMCR, systems and controls and customer outcomes under consumer duty.
Firms facing potential or actual skilled person reviews should contact Complyport early for confidential advice on strategy, scope and execution.
Practical Tips for Managing a Skilled Person Review
These practitioner-focused actions can help firms manage a skilled person review effectively and improve outcomes.
- Establish a central project team with clear senior ownership (SMF1, SMF16, or SMF17) and defined workstreams for data, customer files, governance documents and systems access
- Engage constructively on scope with the FCA and skilled person to avoid unnecessary scope creep while addressing underlying regulatory concerns
- Maintain a clear audit trail of decisions, communications and evidence supplied, this supports both the review process and any defence if enforcement follows
- Pursue parallel remediation where clear deficiencies are already known, such as gaps in financial crime monitoring or market abuse alerts, start fixing them rather than waiting for the final skilled person report
- Communicate proactively with the skilled person firm to identify and resolve issues early in the process
FAQ
10.1 How are skilled persons selected from the FCA Skilled Person Panel?
Firms are typically required to select a skilled person from the FCA’s published panel list. However, the FCA does not endorse or recommend individual panel members. Firms must rely on their own due diligence when choosing a skilled person to ensure the selected party is suitable for the specific review required.
10.2 Who pays for a skilled person review?
The cost of a skilled person review is generally borne by the firm being reviewed, not the FCA.
10.3 Is legal privilege preserved during a skilled person review?
Yes, it is important to preserve legal privilege during skilled person reviews. Firms should ensure that confidential legal advice and communications remain protected from disclosure throughout the review process.
10.4 Can a firm challenge the appointment of a skilled person?
A firm may raise concerns with the FCA if it believes a proposed skilled person is not appropriate, but the final decision rests with the FCA.
10.5 What happens after a skilled person review is completed?
The skilled person will submit a report to the FCA and, in most cases, to the firm. The FCA may require the firm to take remedial action based on the findings.
Do regulated firms have to use a skilled person from the FCA Skilled Person Panel?
Firms do not always have to use a panel firm. When the FCA allows the firm to appoint the skilled person itself, the firm can propose any suitably qualified and independent skilled person firm for approval, whether it is on the panel. However, the FCA may prefer panel firms where speed, complexity, or sensitivity make prior vetting particularly important. Firms must rely on their own due diligence when selecting a skilled person, as the FCA does not endorse individual panel members.
How long does a typical skilled person review take from start to finish?
Timelines vary significantly by scope and complexity. Many section 166 skilled person reviews run for 3-9 months from the Draft Requirement Notice to the final skilled person report. Large-scale file reviews or multi-jurisdictional financial crime investigations can extend beyond 12 months, especially where remediation design and testing are built into the engagement.
What is the difference between a skilled person review and an enforcement investigation?
A skilled person review is a supervisory tool aimed at obtaining an independent assessment and proportionate recommendations, whereas a formal enforcement investigation focuses on whether there has been a breach warranting sanctions. Findings from a skilled person report can inform a subsequent enforcement investigation, but many reviews are resolved through remediation without formal enforcement. Firms should also be mindful of preserving legal privilege during skilled person reviews, especially when legal advice or confidential communications are involved.
Can a skilled person review focus solely on financial crime or market abuse issues?
Yes, many skilled person reviews are narrowly targeted on specific risk themes such as anti-money laundering controls, sanctions screening, transaction monitoring, or market abuse surveillance. The FCA will typically select a skilled person firm from the relevant lot on the Skilled Person Panel to ensure appropriate technical expertise.
When should a firm contact Complyport if it expects a skilled person review?
Firms should contact Complyport as early as possible, ideally when they first become aware of heightened FCA scrutiny or anticipate a potential Section 166 requirement. Early engagement allows Complyport to assist with risk assessment, documentation readiness, scope discussions and strategy, which can reduce cost, limit disruption and support more favourable outcomes.
