The Financial Services Authority, in their wisdom have increased their enforcement activity and a surge of S166 Skilled Persons Reports demands have arived through the doors of many authorised firms in the UK.

As many people are aware, the S166 Report is a tool used by the FSA to better understand what goes on within a company in its treatment of customers, front and back office procedures and to ensure consistency between policy and practice for all advisers.  

 This tool can be used for diagnostic, monitoring, preventative or redial purposes and this will vary depending on the level of perceived risk and the standard of evidence previously collected and assessed by the FSA. If general and specific concerns are apparent, the FSA may instruct investigators under Section 167 or Section 168 of the FSMA 2000 and sometimes these may be separate investigating teams.

While the report can sometimes be seen as a personal attack on advisers or the companies they work for, as well as being an undesirable cost, there are a number of benefits that can be gleaned from the experience. Benefits could be;

• Comfort that the firm’s contemporary written procedure has been adopted and embedded within the sales process and that there is or was general adherence to it.
• Identification of any potential systemic errors, inconsistencies and anomalies that have occurred through evolution, legacy practices or habit, but may remain masked by local knowledge and practice
• Provide a focus and direction for recommendations on rectification and remedial actions that may already have been started and are designed to enhance or strengthen the already robust system.
• Identification of any areas and placing them on the tactical radar and which may need review or revision, providing a firm with a more accurate risk from a purely regulatory perspective.
• Show the firm where blindspots exist in their current practices or governance

No one likes criticism, and especially not from an almost faceless bureaucracy that appears to descend out of the blue for a few hours, pick holes in seemingly robust and happy client files, note every absence of ideal documentation and then respond with a S166 Skilled Persons Report demand some time afterwards with no other notification in the meantime.

The S166 process can appear daunting and expensive – get the facts straight, get the process right and take control. Use a firm that is not just a one person outfit, but a firm that can provide a skill match to your business and a Quality Assurance and project oversight, steering everything toward a positive and accurate report for the FSA. If the content is lacking, they will either order another S166 at your cost, or enter into supervisory proceedings, suspension or worse. Get it right first time, get CEI Compliance.

Details of S166 can be found at wwwS166.co.uk.