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BDO: Number of S166s could hit 1,000 a year

The number of skilled persons reports ordered by the FCA could increase 10-fold to 1,000 a year, warns consultants BDO.

Skilled persons reports, also known as section 166 reports, check for weaknesses or failings in a firm’s practices. The regulator orders these reports to be carried out where it has concerns, and firms have to meet the cost of carrying out the report.The number of skilled persons reports ordered by the FCA could increase 10-fold to 1,000 a year, warns consultants BDO.

The FSA instructed 113 s116 reports in 2012/13, at a cost to firms of £176.4m. The FCA instructed 19 s166s between April and June.

Speaking at an Institute of Chartered Accountant in England and Wales conference in London last week, BDO financial services risk partner David Morrey said the FCA is adopting a far more “intrusive style” than its predecessor.

Morrey said: “We have gone hit over 100 s166s a year and the FCA has talked about reaching 400 while I have been told it could go as high as 1000. Organisations are much more likely to be subject to such a review than they have been before.

“My theory is the FCA really struggles to get a firm through enforcement as there are lawyers’ costs and it has limited resources. It seems to me s166s are a way of punishing a firm as it will be forced to pay for the review.”

Jacksons Wealth Management managing director Pete Matthew says: “I am worried about this power being overused. Our fees are already huge and rising so I hope these reports are not slapped on firms for minor transgressions.”

An FCA spokesman says: “We use these powers to obtain an independent view of aspects of a firm’s activities that for example cause us concern or where we require further analysis.”

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Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. My view is that it has very little to do with the “struggle to get a firm through enforcement”, but everything to do with how ignorant the FSA/FCA are to the industry it regulates, the FSA/FCA simply do not know enough or understand the workings of what we do,
    The article is spot on that they use 166s to “PUNISH” and kick their dogs to heel, it is bulling to the extreme.
    I would ask, what if any ? (do the supervisors or issuers of such 166s), have by way of qualifications, experience, and real evidence, when they pass the guilty till you prove yourselves innocent verdict ?

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