As part of our ongoing series on navigating Skilled Person reviews, this latest insight follows on from Skilled Person Reviews: What Firms Need to Understand, where we explored why Skilled Person reviews remain one of the regulator’s most influential supervisory tools. In this follow-up, we turn to the practical realities of responding to a Requirement Notice, an essential step in managing regulatory scrutiny effectively and setting the tone for the review that follows.
Requirement Notices do not suddenly pop into a CEO/CCO’s inbox. Whether issued under s166 FSMA or as part of an RTGS Scheme application process, they are almost always the culmination of a series of regulatory touchpoints. For s166type reviews, firms will typically have experienced supervisory visits, multiple rounds of information requests, thematic meetings, and often a ‘strongly worded’ letter signalling the regulator’s concerns and proposal for a Skilled Person review. For RTGS-related notices, firms should already be familiar with the structured application process and the expectations set out by the Bank of England.
In short, a firm is never truly “surprised” by a Requirement Notice. The signs are visible well in advance, and senior leadership should anticipate the possibility of a Skilled Person review. When the Notice does arrive, the firm must respond promptly, methodically, and with clear governance, demonstrating to the regulator that it is taking the matter seriously and is committed to full cooperation.
Acknowledge Receipt
The first step is straightforward but essential. The firm should formally notify the regulator that the Requirement Notice has been received, confirm that the scope and expectations are understood, and outline the immediate next steps the firm intends to take.
Early engagement with the regulator is vital. Firms should seek clarification on any areas of ambiguity within the notice, whether relating to scope, objectives, timelines, or expectations around documentation and access. Addressing uncertainties at the outset prevents misalignment later in the process and reduces the risk of delays or rework. In my experience, it is imperative that a firm constructively challenges any elements of a Requirement Notice which do not appear to be relevant or proportionate.
Engagement should be open, transparent, and solution-oriented. Demonstrating a willingness to collaborate and a commitment to addressing regulatory concerns can significantly influence the tone of the review and the regulator’s perception of the firm’s culture.
Internal Coordination
Once the notice is acknowledged, the firm must mobilise quickly. This involves establishing a dedicated internal project structure, commonly known as a Skilled Person Liaison Office. This team should have a dedicated Project Manager, with administrative support, and include representatives from Compliance, Legal, Risk, Operations, and any business unit leads relevant to the scope of the review.
Many firms, particularly those without prior Skilled Person experience, choose to bring in external advisory support to guide them through the process. This can be critical. Skilled Person reviews are high-stakes exercises, and firms that lack internal expertise may struggle to meet expectations, respond effectively to requests, or manage the volume of work. External support can provide structure, challenge, and regulatory insight that materially improve the firm’s ability to navigate the review.
The internal team should maintain a clear governance framework, including regular reporting to senior management and the Board. Updates should cover emerging risks, issues, progress against timelines, and any early findings identified through internal review or regulator engagement. This ensures leadership remains fully informed and able to make timely decisions.
Selecting the Skilled Person
If not a direct appointment (where the regulatory authority takes the decision away from you), the firm will be required to propose a shortlist of Skilled Person candidates. The regulatory authority will request that the firm select three firms, with one identified as the preferred option. The regulatory authority will then highlight their Skilled Person Panel, and the relevant ‘Lot’ to select their Skilled Person from. This is only a ‘suggestion’ from the regulatory authority, as the firm does have the power to select a Skilled Person who is not on the Panel. However, there has been a demanding and selective process by the FCA and PRA on identifying consultancies with the right experience and expertise to conduct Skilled Person reviews, and therefore, due consideration should be given to the firms listed on the Panel.
To ensure a robust and credible shortlist for the regulatory authority, it is advisable to request proposals from at least five firms. This provides a broader range of expertise, methodologies, and commercial options, enabling the firm to make an informed selection.
When evaluating potential Skilled Persons, firms should consider the following paramount qualities:
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Skilled Person’s experience in the topic and sector
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Methodology and approach
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Capacity to meet timelines
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Independence and objectivity
Further to the above, firms should identify a Skilled Person who has the ability to work constructively with both the firm and the regulator. The review is an intense assessment of a firm’s systems and controls, and at times, differing opinions on regulatory requirements and expectations. Therefore, it is essential to choose a Skilled Person who possesses the appropriate expertise, as well as a team with whom you can establish a strong, professional relationship. This ensures that sensitive discussions can be managed effectively without compromising the quality or timeliness of the review.
Selecting the right Skilled Person is a critical decision. The quality of the review and the Skilled Person’s experience throughout the process can vary significantly depending on the chosen provider. Consequently, the firm should consider organising an internal panel of individuals from across the business to ensure an informed and unbiased decision can be made.
Prepare Documentation
Preparation should begin immediately. The Skilled Person will require substantial documentation to conduct their review, and as timelines are frequently constrained, firms should begin collecting, organising, and indexing all potentially requested materials in advance of the review process. Do not underestimate the Skilled Person’s information request list and the time it takes to compile. Do not wait for the request, be proactive and start collating straight away. This may include policies, procedures, MI, governance records, risk assessments, monitoring outputs, training materials, and evidence of remediation activities.
If the firm is already aware of issues, whether identified internally or raised by the regulator, it should begin developing supporting materials such as:
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Root cause analyses
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Remediation plans
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Implementation timelines
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Evidence of progress to date
On occasion, the regulator will allow a firm to undertake its remediation of known weaknesses prior to the Skilled Person review commencing. If this is the case, the firm should collate the following documentation:
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Evidence of closure for each remediated item
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Working Group and Steering Committee MI packs and minutes
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Evidence of remediated controls being embedded
Being proactive in this way demonstrates maturity, accountability, and a genuine commitment to addressing weaknesses. It also reduces the risk of delays once the Skilled Person begins their work.
Walkthroughs
In parallel with document preparation, firms should invest time in developing clear, well-structured walkthroughs. A walkthrough is an opportunity for the firm to present its business model, operational processes, and control framework in a coherent narrative, rather than allowing the Skilled Person to piece it together independently. Well-prepared walkthroughs enable the firm to set the tone and proactively acknowledge known weaknesses, including those that may not be explicitly referenced in the Requirement Notice or supervisory feedback.
Each walkthrough session should be supported by a tailored presentation that outlines key processes, control ownership, governance structures, and areas of ongoing improvement. These materials not only help guide the discussion but should also be shared with the Skilled Person afterwards, ensuring clarity, consistency, and a strong first impression of the firm’s approach to transparency and regulatory engagement.
A Proactive and Transparent Approach
Ultimately, the way a firm responds to a Requirement Notice sends a strong signal about its culture, governance, and approach to regulatory compliance. A structured, transparent, and proactive response not only helps manage the operational impact of the review but can also influence regulatory perceptions and outcomes. Firms that engage early, prepare thoroughly, and demonstrate accountability are far better positioned to navigate the process effectively and minimise disruption to the business.
Meet the Expert
Michael Knight-Robson, Financial Crime Partner 
Michael has joined as a Partner in the Financial Crime team, working alongside Jessica Cath. With over 15 years’ experience in financial crime compliance, he was most recently a Director at BDO, where he built a strong reputation for leading s166 Skilled Person reviews and providing firms with proportionate, risk-based advice to stay compliant. His career also includes senior roles at Bovill, Lloyds Banking Group and Investec, giving him practical, well-rounded expertise to help firms strengthen their financial crime compliance frameworks.