The FCA responded this week to industry feedback requesting greater transparency in relation to its use of section 166 'skilled person' reviews.
As part of its Feedback Statement (FS13/1) to its earlier Discussion Paper on Transparency (DP13/1), the FCA summarised responses from regulated firms and consumer organisations amongst others. They had suggested that the regulator publish more information on its process for deciding when and in what circumstances it would decide to commission a section 166 review; the evidence used in making these decisions; and an indication of the outcomes of s.166 reviews. The FCA rejected these requests stating that although it could provide conceivably some additional guidance, such guidance would be too general to be useful due to the requirements of confidentiality for individual cases under s.348 FSMA. The FCA would not be drawn into further explanation but pointed to the information it already publishes about the cost and number of s166 reviews and to the Handbook, which sets out the factors FCA supervisors consider when deciding to use this tool.
The regulator also dismissed questions surrounding the cost justification for its use of s.166 experts, saying that it believes it is a fairer and more equitable use of FCA resources to require individual firms to pay for their s. 166 reviews than to share the costs across the industry.
This is all disappointing.
Whilst the FCA's comments about confidentiality and s.348 obligations address specific information about firms, broader statistics could be published which firms may find useful. Broad categories indicating how firms came to be issued with a s.166 requirement notice (for example, out of a thematic review, self-reporting, consumer complaints, or 'close and continuous' supervision meetings) and the evidence used to make the decision would be informative and may provide greater predictability as to the use of this power. An indication of the outcomes of completed s.166 reviews (for example, an enforcement investigation, a customer redress programme or no further action) would provide greater transparency as to their utility.
The FCA's full Transparency Feedback Statement can be found here.
Posted by: Sarah Thomas, Senior Associate and Matthew Gill
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