The FCA commissioned 11 skilled person reports in the last three months of 2013, half the number commissioned in the same period a year ago.
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.
Figures from the FCA show the number is down from 12 in Q3, and from 21 in Q4 2012.
Of the 11 s166 reports commissioned in Q4, three were for banks and building societies, two for insurance companies, two for general insurance brokers, two for securities and futures firms, one for a mortgage firm and one for an investment management firm.
Financial advisers would either fall into the general insurance brokers category, or the personal investment firms category. The latter had no reports commissioned during the period.
Pinsent Masons partner Monica Gogna says: “While it is right and proper that there is an appropriate level of supervision to ensure consumer protection, there had been concerns within the industry that the costs of skilled persons reviews were spiralling out of control and that – viewed alongside other regulatory initiatives – new entrants could be deterred by the ever-increasing burden of compliance.
“Whilst there has been a reduction in s166 requests, it is clear the FCA continues to closely monitor authorised firms through other means such as ongoing thematic reviews.”
Under the FSA, 113 s166 reports were instructed in 2012/13, at a cost to firms of £176.4m.