Section 166 Support
So you’ve been served with a Section 166 notice. What do you do now?
Firstly, don’t panic. The FCA issues around 50 Section 166 notices a year. So you’re certainly not alone. In an era of ever more stringent and complex regulation, it’s all too easy to engage in non-compliant behaviour inadvertently.
Secondly, we’re here to help, with our specialist Section 166 support service.
The first priority is to understand what happens next and what it means for your business.
What is Section 166?
Section 166 of the Financial Services and Markets Act 2000 (FSMA) empowers the regulator to require that a skilled person goes into a firm and prepares an independent report on any matter about which the regulator has concerns. Although the FCA has discretion over the selection of the skilled person, it will be your firm that foots the bill.
Typically, the skilled person’s report will be split into four sections:
- Identifying, assessing and measuring risks
- Reporting and monitoring identified risks
- Suggesting preventative action
- Proposing remedial action, including customer redress
What does the FCA do with the report?
The regulator will be using the report in four main ways:
Diagnostic: finding out more about a particular concern – perhaps something highlighted in a thematic visit, risk assessment or notification – and determining whether further regulatory action is required
Monitoring: monitoring your firm’s systems and controls
Preventative: gathering and analysing information on an identified risk, e.g. concerns over your firm’s financial crime risk management, and developing recommendations for a resolution
Remedial: helping to develop, oversee and report on the implementation of a remedial action plan or assisting with the design of a customer redress programme.
The fact that you’ve received a Section 166 notice simply indicates that the FCA become aware of something that rings potential alarm bells – and needs someone (the skilled person) to go in and find out more.
What does it mean for you?
It’s vital you respond to any Section 166 notice appropriately. The way you liaise with the FCA throughout the process will significantly influence the view the regulator ends up forming of your organisation.
If the skilled person’s report confirms that the FCA was right to be concerned, the regulator will investigate your firm. But if their report shows your firm has been fully compliant at all times, the matter can be resolved without further action.
In our experience, it’s best to be as transparent as possible with the skilled person. If anything, you should err on the side of sharing too much rather than too little information. This can save a lot of to-ing and fro-ing after the report is submitted. Any appearance of withholding information will reflect badly on you.
In fact, any misstep in how you interact with the skilled person or the FCA could negatively impact the outcome for your firm. Which is why we would strongly advocate seeking professional Section 166 support from a firm that knows the process inside out.
Our specialist team at Thistle has extensive experience in providing effective Section 166 support and helping firms navigate the process and resolve as efficiently as possible.
The impression you make through the Section 166 process also has an important bearing on how the FCA might respond to any future concerns – as it is likely to be keeping an eye on your activities for some time afterwards.
Our team can help you prepare for FCA enforcement or a Section 166 visit. For example, we can conduct mock interviews to test the readiness of your senior team and coach them as appropriate. We can assess the robustness, effectiveness, and adequacy of your policies and procedures – and develop them where necessary – helping you create a robust governance framework.
For effective help fast with Section 166 support work, contact our experts today. You can reach us by filling out the contact form on this website, by emailing firstname.lastname@example.org, or by calling us on 0207 436 0630.