FCAs use of s166 Skilled Person Reports

For each current financial year, the FCA publishes quarterly information about how many s166 skilled person reports it has commissioned. The quarterly information for 2021/22 hints at some interesting trends regarding the FCA's areas of interest.

In total, the FCA reports that it used s166 powers in 41 cases:

• Q1 – nine reports;
• Q2 – nine reports;
• Q3 – 12 reports; and
• Q4 – 11 reports. 

The information at a sectoral level is of interest:

• There has been a steady incline in the number of reports in wholesale financial markets: no reports were commissioned in the first six months, whereas five reports were commissioned for the second half of the year. Over the course of the year, the FCA commissioned ten reports within the investment management sector.
• Skilled persons reports within the retail investment sector have decreased, with only one commissioned during Q4. However, overall, the numbers have remained consistent across the year.
• Of the reports commissioned, 11 concerned financial crime and a further 11 concerned conduct of business.

How does this compare to the previous year? 

Certain commentators predicted that the use of s166 powers would increase this year and following to assess how firms responded to the challenges of COVID-19. That has not materialised. 

In 2020/2021, the FCA used its s166 powers in 68 cases, compared to 41 cases this year. Therefore, this year has seen an overall drop, including in relation to financial crime concerns (six fewer reports). However, the biggest drop appears to have taken place in the retail section (retail banking & payments, retail lending, and retail investments). 2021/22 saw a total of 23 reports, which is marked reduction from 40 during 2020/21. The reasons for such a drop would be speculation. It may be that it is indicative of shift in focus by the FCA but more likely it could simply suggest that 2020/21 was a spike year and an outlier. The latter may be more plausible since 2019/20 saw 34 commissioned s166 skilled persons reports.