Navigating Section 166 Skilled Person Reviews: A Guide for Boards and Compliance Leaders

At a Glance

The FCA can commission a Section 166 skilled-person review when it has concerns about a regulated firm or needs further analysis. The firm should control the review scope, evidence trail and remediation decisions without confusing document volume with control effectiveness.

The FCA may commission a skilled-person review when it has concerns about a regulated firm or wants further analysis. The FCA describes two appointment routes: the firm may propose and contract with the skilled person, or the FCA may contract directly. The FCA can charge the firm for the work, so scope, governance and evidence quality matter from the outset.

A successful response to a Section 166 review hinges on precise scope governance, reliable evidence collection, and accountable remediation.

The Decision Firms Need to Make

Skilled person review triggers and appointment routes

The FCA may commission a skilled person review when it has concerns about a regulated firm or requires further analysis. Firms can either propose and contract with the skilled person or have the FCA contract directly. The current panel structure includes twelve lots and is active from 1 April 2026 to 31 March 2030. Firms should prepare for potential reviews by understanding the appointment process and cost implications.

Handbook rules on skilled person reviews

SUP 5.3 to SUP 5.5 outline the FCA's policy on skilled person reports, including scope, appointment, reporting, and firm duties. Compliance leaders should review these sections to align internal processes with FCA expectations.

Who This Guide Is For

This guide is for boards, senior managers and compliance leaders responding to a commissioned review or testing readiness for one. The live commissioning documents remain decisive: they define the review's purpose, evidence requests and reporting arrangements for the firm concerned.

A Section 166 review is not a routine requirement for every firm. The FCA uses the power where it has concerns or needs further analysis. Firms should therefore avoid generic readiness theatre and focus on whether their governance records, source data and control evidence can withstand focused external testing.

MEMA Practical View

Boards should understand the strategic implications of a Section 166 review, including potential reputational and financial impacts. Key questions include: How does the firm identify and address potential concerns before they escalate? What evidence can demonstrate effective controls to the skilled person?

MEMA's view is that remediation should be governed as a control-effectiveness programme, not a document rewrite. The board record should show the finding, root cause, affected population, interim protection, accountable owner and independent closure test. This creates a traceable basis for challenge without speculating about how the FCA may perceive the firm.

The board should receive a scoped view of the skilled-person exercise: what the commissioning documents ask, which evidence requests remain open, where management and the skilled person disagree, and whether emerging findings reveal wider control or governance weaknesses. Submission volume is not a meaningful progress measure unless the pack also shows evidence quality, unresolved limitations and the risk attached to each gap.

Evidence to Prepare

MEMA analysis suggests that firms should establish a clear governance framework for managing skilled person reviews, including roles for scope negotiation, evidence collection, and remediation oversight. This framework should involve senior management and the board to ensure accountability and alignment with strategic objectives. Firms should also consider the financial implications, as they bear the cost of the review.

A practical readiness exercise should define appointment criteria, conflicts checks, evidence ownership and escalation routes rather than pre-select a provider. Under the FCA's current framework, a firm-appointed skilled person does not have to be on the FCA panel, while the appointment route and review scope remain case-specific.

Create one controlled request register for the skilled-person exercise, linking each request to the agreed scope, evidence owner, source system, submission date and quality reviewer. Before submission, test whether the material is complete, internally consistent and capable of being reproduced. Record interpretation questions rather than silently widening or narrowing the request, and retain the decision reached. Keep Skilled persons reviews and the commissioning documents with the register so the statutory and case-specific boundaries remain visible.

How to Prepare

Source Evidence

Plain English Glossary

• SUP - Supervision manual. FCA Handbook section covering supervision, reporting, notifications, and waivers.

Disclaimer

This article is for general information only and does not constitute legal or regulatory advice. Firms should assess the application of regulatory requirements by reference to their permissions, products, customers and operating model.

How MEMA Can Help

MEMA can help firms translate regulatory change into practical controls, policies, monitoring activity and board evidence. Book a free scoping call to discuss what this development means for your firm.

MEMA helps firms apply regulatory developments through its ongoing FCA compliance support.

Further reading: the FCA's 2026 compliance priorities.