Home Business News FCA third-party reviews spikes 68%

FCA third-party reviews spikes 68%

by LLB Reporter
1st May 20 5:46 am

Figures released by the FCA about Skilled Persons Reports that were analysed by Duff & Phelps, the global advisor that protects, restores and maximises value for clients, revealed several important findings.

The data shows that the regulator ordered 24 Skilled Person Reports in Q4 2019/2020. This brought the total for the year to 57, a 68% increase from 2018/2019 when only 34 reports were commissioned. That 2019/2020 figure represents the highest annual number of reports since 2012/13, when 113 reports were ordered.

Skilled Persons Reports, ordered by the FCA under Section 166 of FSMA, are a supervisory tool used by the regulator when it is not satisfied that a firm can remediate its own failings. Reports typically investigate particular failings in firms, diagnose shortcomings in systems and controls, or provide specific assurance on a firm’s remediation of issues.

The firm subject to the review must pay for the probe, which is conducted by an independent professional services firm. The scope and cost of these reviews vary widely, with some costing less than £100,000 while others run into the millions. There are no cost figures available yet for 2019/20 but in 2018/19 the 34 reports that year cost firms a total of £51.2m.

The most common area of focus for Skilled Persons Reports in 2019/2020 was financial crime, with 16 investigations out of 57 (28%) concerning this topic. This continues what has been seen in the past two years; 2018/2019, when 14 out of 34 (41%) reports concerned financial crime and 2017/18 when that topic was the subject of 11 reports out of 29 (38%).

Nick Bayley, Managing Director and Head of Duff & Phelps’ UK Compliance and Regulatory Consulting practice, said, “There was quite a significant uptick in the number of S.166 reports commissioned by the FCA in the last quarter of 2019/20, and it’s evident that the FCA is currently putting a lot of focus on the retail banking and retail lending sectors.

“In the case of retail lending, the increased number of reviews represents the FCA further ratcheting up its level of scrutiny of that sector, since taking over the regulation of consumer credit in April 2014.  Financial crime remains a crucial area of focus for the FCA, which is something we see mirrored by almost all other major financial services regulators across the world.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]