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Tyrie questions FCA over cost of skilled person reports

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.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. These reports are completely wrong and immoral. The cost of them is enough to put many firms out of business, even if no wrong doing has been found. Well done Andrew Tyrie for questioning this injustice.

  2. They never get it, do they? “The FCA has admitted the change could push up the cost for firms”

    For consumers, dear FCA, push up costs for consumers.

    These slow witted cretins are people who think fining banks hurts shareholders as if they are some band of thieving capitalist brigands worthy of a whipping. No, dear FCA,, fining banks is fining customers through subsequent higher charges and/or shareholders who are…oh yes…consumers with a modets pension pot or endowment.

    Only the FCA could believe that shoplifting from Tesco’s was better than the corner shop because it’s “victimless”.

  3. Soren – you can’t apply a blanket statement like that to this issue. Some of the recent bank mis-selling scandals have been subjected to these reports and the huge amount of (justified) consumer redress proves their worth.

    It depends entirely on whom they are levied and how. Some may be bad and some may be good, but it’s unlikely anything will ever be wholly good or bad.

  4. Matthew – I disagree; just like I disagree that innocent people should pay their legal fees when they are found not guilty in a court. It’s just plain wrong. If you are innocent you should not pay the costs of proving that. The regulator has a bottomless purse – you and I do not.

  5. @ Matthew exactly ! you cant make a blanket statement to this issue, and like wise the FCA cannot make blanket decisions to wantonly dish out S166 !
    I think this is what Mr Tyrie is asking and quite rightly so !! he is asking the FCA to provide details on how the decision is made and what is done to keep down the enormous cost.

    To be honest the S166, is a bulling tactic (I would say in a large majority of cases) !

  6. And what will Andrew Tyrie do if Martin Wheatley’s response to his concerns on this issue is the same as it was to the suggestion that there’s a strong moral argument in favour of the FCA refunding intermediaries the £118m we were overcharged by the FSA?

    Wheatley will set out the FCA’s rationale for commissioning these reports, state that it’s satisfied that they’re justified, that it has no intention of changing tack and that will be that. No body, least of all the TSC, exists to hold the FCA to account or to force it to change its stance on anything. Mark Garnier has openly admitted this. Letters such as this from the TSC to the FCA are just empty posturing with nothing whatsoever to back them up. What the Committee SHOULD be doing is making moves towards the creation of a Statutory Independent Regulatory Oversight Committee that WILL have appropriate powers to impose the necessary directives on the FCA. Yet, most peculiarly, some commentators seem to think that such a body would constitute nothing more than another quango. What do you people propose instead of just knocking other people’s ideas, with none of your own?

    And, as always, what are APFA’s stance and plan of action on this?

  7. Julian – Who will then oversee the oversight committee?!?

  8. Matthew who?

  9. The world health organisation? Slightly outside thier remit wouldn’t you agree…?

  10. That’s what we have unelected quango’s for, isn’t it, Matthew & Julian.

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