Skilled Person (Section 166) & Supervisory Response
A section 166 review is not an audit a firm commissions for its own comfort. It is a statutory supervisory process: the FCA sets the regulatory purpose and expects reliable evidence in return. If a review is proposed or already underway, or you are dealing with a Dear CEO letter or another supervisory intervention, the task is to respond openly while keeping control of your own governance, evidence and remediation. MEMA supports firms through that process from mobilisation to closure.
The Position
What a section 166 review is, and is not
Section 166, FSMA 2000
The Legal Power
Section 166 allows the FCA to require a report by a skilled person on matters about which it could require information under its statutory powers. The FCA's operational framework for using it sits in SUP 5 of the Handbook.
Section 166A
A Distinct Power
Section 166A is a separate power to appoint a skilled person to collect or update information. It should not be treated as a procedural version of section 166 — the FCA lists them as two distinct types of skilled person review.
Two Appointment Routes
Who Appoints The Skilled Person
The FCA decides which route applies: the firm may be required to put forward a suitable skilled person for FCA approval, or the FCA may contract with and appoint the skilled person directly. Either way, the FCA determines what is appropriate and remains the recipient of the work.
The Firm Pays
No Standard Price Or Duration
The FCA's rules allow it to require the firm to pay the skilled person's costs as a fee. Neither legislation nor SUP 5 sets a standard price or duration for a review — published figures and peer experience are not a safe basis for promising a board a fixed timeline or cost.
Why the FCA Uses a Skilled Person
SUP 5.3 sets out that a section 166 report can serve a diagnostic, monitoring, preventative or remedial purpose. The report itself may provide information, analysis, assessment, expert advice, recommendations or assurance. Because that scope is broad, a review can address a single control or a connected set of governance and outcome concerns — the terms of reference, statutory notice and FCA correspondence in your specific case are the controlling documents, not market assumptions about what a “typical” review covers.
Firms sometimes arrive at this point holding a Dear CEO letter or another supervisory communication rather than a formal section 166 notice.
Whichever supervisory communication started it, the same mobilisation discipline applies: a named sponsor, a controlled evidence process, and a remediation plan the FCA can follow.
What We Do
From the first ten working days through to closure
Mobilisation & Governance
- Confirm sponsor, response lead, committee route and decision rights
- Parse every question, period, entity, product and population in scope
- Preserve relevant records and identify system owners
- Set up one intake and release process for FCA and skilled person requests
Evidence Control
- A controlled evidence process that improves completeness and traceability without standing between the skilled person and the facts
- Recording the source system, extraction method, period, population, owner and reviewer for each delivery
- Version control on policies, committee papers and management information, so the review sees what applied at the time
- Factual, non-coached interview preparation for staff
Findings To Durable Remediation
- Containing an evident risk without waiting for the final report, and keeping the FCA informed where appropriate
- Connecting each finding to its evidence, affected population, root cause, containment and permanent action
- An independent effectiveness test before any action is closed
- Board and SMF support, including interview preparation
Mistakes That Increase Regulatory Risk
Defensiveness is not the same as disciplined challenge. Firms may correct factual errors, clarify scope and explain contrary evidence — the risk arises elsewhere.
Frequently Asked Questions
Select a question to view the answer.
Related Services
Firms under a s166 review often need these alongside it
Related FCA Guidance
Primary sources and deeper reading on FCA supervision powers.
Section 166 Readiness
Scope, appointment, evidence control, governance and remediation, with primary sources.
HandbookSUP: Supervision & Reporting
FCA supervision powers, regulatory reporting, and notification obligations.
HandbookSYSC: Systems & Controls
Governance, risk management and internal control requirements relevant to remediation.
Tell us where things stand
Whether a section 166 review has just been proposed, is already underway, or you have received a Dear CEO letter or another supervisory communication, tell us the position and we will come back to you.
Facing A Section 166 Review Or FCA Intervention?
How a firm handles the first ten working days shapes the rest of the review. If a review is proposed, underway, or you are dealing with a Dear CEO letter or other supervisory intervention, talk to us before the response process is already set.
📞 Phone: 0330 133 0811
📧 Email: contact@memaconsultants.com