Skilled Person reviews remain one of the regulator’s most powerful supervisory tools. Michael Knight-Robson, Partner at Thistle Initiatives, explains what they are, why they happen, and how firms can navigate them confidently.
Skilled Person Reviews play a vital role in the regulatory landscape of the UK financial services sector. These reviews, often mandated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA), provide an independent assessment of a firm’s compliance framework across areas such as safeguarding, culture, risk management, prudential, financial crime, etc.
The ‘threat’ of a s166 Skilled Person review can send shivers down senior managements’ spine. Not only due to the direct cost of the review, burdened by the firm, but also enhanced regulatory scrutiny can lead to temporary restrictions on services, financial penalties, and reputational damage by being ‘named and shamed’ in FCA notices. One further impact, which is consistently overlooked, is the effect Skilled Person reviews and regulatory scrutiny can have on personnel. Should significant gaps be identified, although it is the firm being told its framework is not up to scratch, behind these controls are individuals who have no doubt worked hard to try and develop and maintain robust systems and controls. Pressure from scrutiny, and pressure from senior management to remediate effectively and efficiently, can all lead to morale being impacted, and in some cases, lead to talent leaving firms. All of these can then lead to further indirect costs to the firm.
For financial services professionals, understanding the purpose, process, and best practices for managing Skilled Person reviews is paramount to ensure regulatory compliance and maintain strong relationships with authorities.
What is a Skilled Person Review?
Predominantly, there are two types of Skilled Person reviews commissioned by the regulatory authorities:
- Section 166 (s166) Skilled Person Review - an independent assessment required due to concerns of a specific control (or multiple areas) of a firm, commissioned by the regulatory authorities under the Financial Services and Markets Act 2000 (FSMA).
- Real-Time Growth Settlement (RTGS) Skilled Person Review – again, an independent assessment of a firm’s control framework, however requested by the regulatory authorities prior to a firm onboarded as a participant of the Bank of England’s RTGS scheme, therefore acting as more of an assurance tool that a firm’s control framework is adequately robust. These reviews typically cover governance, oversight and consumer duty; safeguarding, adequate financial resources; IT controls and financial crime.
Although a s166 Skilled Person review will cause more distress to a firm, RTGS Skilled Person reviews can also highlight weaknesses, and perhaps lead to more questions than answers.
Click here to read our latest case study.
Why are Skilled Person Reviews Important?
Skilled Person reviews serve several important objectives:
- Regulatory assurance - they provide regulators with an independent and objective assessment, ensuring firms are operating within the required legal and regulatory frameworks.
- Risk management - reviews help identify weaknesses or gaps in a firm’s controls, enabling timely corrective action to mitigate potential risks.
- Compliance improvement - the findings and recommendations should ultimately drive enhancements to processes, policies, and governance structures, strengthening overall compliance.
Ultimately, these reviews are commissioned to protect consumers, promote market integrity, and support the stability of the financial system.
How and Why Do Skilled Person Reviews Occur?
An RTGS Skilled Person review, as mentioned above, occurs when a firm wishes to be a participant of the Bank of England’s RTGS scheme. A s166 Skilled Person review occurs when the FCA or PRA identifies issues within a regulated firm that require independent and expert assessment. The process can occur during routine supervision, thematic reviews, section 165 (s165) requests or through intelligence indicating weaknesses in systems and controls. If regulatory authorities believe the firm may not fully understand the root causes of the problem, the regulator will typically decide that a Skilled Person review is necessary – a full ‘drains up’ review of systems and controls. On occasion, should a firm show maturity, acceptance of findings, and the right skills and resources to remediate identified issues, the regulatory authorities may allow the firm some time before a Skilled Person review commences. Down the line, this will prevent ongoing and multiple ‘stages’ or ‘phases’ of a Skilled Person review – which can save on financial costs.
Recent Use of s166 Skilled Person Reviews
In its 2024/25 Annual Report, the FCA noted it commissioned 47 reviews, with financial crime, conduct of business and risk management accounting for 36. During this period, this was a decrease of circa 60% compared to the previous period. From experience, it was no surprise to see the ‘Consumer Investments’ sector attracted substantial attention, almost 50% of reviews. Despite the overall decline, the volume remains consistent with previous periods, suggesting a return to a more stable supervisory rhythm rather than reduced scrutiny.
However, the decline of the FCA’s utilisation of s166 Skilled Person reviews has continued in the first half of 2025/26, with recent data showing the FCA’s cadence has shifted markedly to smaller, more targeted interventions. The regulator commissioned 10 s166 reviews in Q1 (April to June 2025) and six in Q2 (July to September 2025). One message from the H1 2025/26 data is that the composition of the reviews to date in this current period showcases what remains top of the FCA’s agenda: combating financial crime. In Q1 there were 4 reviews out of 10 focused on financial crime, with 4 out 6 in Q2, meaning financial crime reviews account for 50% of activity during the first half of the year. Even as total numbers fell, the proportion of financial crime focused reviews rose, signalling intensified, targeted scrutiny of AML/CTF and sanctions controls.
For firms, the message is clear: the FCA is applying Skilled Person reviews more selectively but with greater strategic intent. Strong governance, effective financial-crime controls, and demonstrable risk-management maturity remain critical to avoiding intrusive supervisory action.
Over the next month, we’ll be publishing content to help firms navigate Skilled Person reviews, including:
- How to react and respond to a Requirement Notice;
- How to manage relationships with the Regulatory Authority and Skilled Person;
- How to prepare for a Skilled Person review, including organising a dedicated project management team; and
- What to do when you receive the draft, and final, report.
Should you wish to discuss Skilled Person reviews in further detail, please get in touch.
Read more about our Skilled Person reviews offering and expertise here or click here to read our latest case study.
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.