Treasury select committee chair Andrew Tyrie has written to the FCA raising concerns over the cost of skilled person reports.
Skilled person reports, also known as section 166 reports, check for weaknesses or failings in a firm’s practices and cover areas such as compliance, fraud, products and capital adequacy. 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.
In a letter to FCA chief executive Martin Wheatley, published today, Tyrie asks for the cost and date of each review since 2008, details of how the decision is made to begin a s166 review and what the regulator does to ensure the cost of a review is kept down.
He says: “I am particularly concerned with the costs that must be borne by firms – and consequently their customers – when the FCA requires such a report.”
Since 2013, the regulator has been able to commission the review itself, passing the cost onto the firm. Before that it had to send a notice to the firm and either nominate a third party to carry out the work or ask the firm to nominate a reviewer who they would then deal with themselves.
The FCA has admitted the change could push up the cost for firms.
In June, the Prudential Regulation Authority revealed it had ordered 33 s166 reports in 2013/14, at a total cost of £11m.
The regulator is set to appear in front of the TSC later this month.