What is a Section 166 or Skilled Person Review?
What is a Section 166 or Skilled Person Review?
A Section 166 also known as a Skilled Person Review, is where the Prudential Regulatory Authority (PRA) or Financial Conduct Authority (FCA) require an independent expert (the Skilled Person) to review a regulated firm’s activities. This power is granted under the Financial Services and Markets Act 2000 (FSMA), as amended by the 2012 Act. This kind of review can be in any part of a firm’s regulated activity including conduct, governance, risk management and controls, prudential matters, financial crime and market abuse. Skilled Persons have the experience and capability to analyse how firms are putting regulatory rules, guidance and principles into practice. A Skilled Person Review or Section 166 (s166) typically involves reviews of documentation, interviews and sample-based testing, with a list of recommendations to address gaps in regulatory expectations. The firm is then required to develop an action plan to address the findings from the review. A s166 is typically quite demanding. There are direct costs for the firm to pay for the services of a Skilled Person, and the firm must invest time and facilitate access to enable the Skilled Person to carry out their work.
How does a Section 166 come about?
If the PRA or FCA have concerns about a firm's activities or want further analysis they can request a Skilled Person Review. This is a powerful tool for regulators to collect information about a regulated entity and get an independent assessment of its activities.
The first stage is that the FCA or PRA issue a draft Requirement Notice to the firm setting out the background, issues and proposed scope of a review. While regulators can appoint a Skilled Person themselves, more often they allow the firm to select three potential Skilled Persons, with its preferred choice. Once the Skilled Person is approved by the regulator, the firm contracts and works with them directly.
What is the Skilled Person Panel?
The Skilled Person Panel is the list of independent experts approved by the regulators to undertake a s166. Skilled Persons are firms and individuals who have the credentials to act as an independent expert across a range of topics. This involves a deep understanding of regulatory requirements and practical experience of how firms must implement these into their business.
Every four years, the regulators retender for the Skilled Person Panel. At the most recent retender, at the end of 2025, BDO was successfully selected for all 11 lots we applied for, meaning that we can support firms across a wide range of regulatory matters. This includes new lots for transaction reporting and market abuse.
BDO LLP has been selected to act on the following Skilled Person lots:
- Lot A: Client assets and safeguarding
- Lot B: Governance, accountability and culture
- Lot C: Controls and risk management frameworks
- Lot D: Conduct of business
- Lot E: Financial crime
- Lot F: Market abuse
- Lot G: Prudential – Deposit takers, recognised clearing houses, Central Securities Depositories and PRA-designated investment firms
- Lot H: Prudential - Insurance
- Lot I: Prudential - Adequate financial resources for FCA solo-regulated firms
- Lot J: Information and communications technology and cyber risk and resilience management
- Lot M: Trade and transaction reporting
The full FCA/PRA skilled person panel can be found at the links below.
FCA Skilled Person Panel / PRA Skilled Person Panel
In addition to the Skilled Person Panel we were also selected to support the FCA with insolvency expertise in the event of multiple firm failures, and on the Consulting Panel for providing services directly to the regulators in areas of: trade and transaction reporting, financial analysis, economic regulation and analysis, resource augmentation, business consultancy, forensic accountancy and risk management.
Useful Section 166 and Skilled Person links
Click to find out more about FCA Skilled Person Reviews
Click to find out more about the PRA approach to supervision
How can BDO help with a Section 166?
Should your firm become subject to a s166 requiring a Skilled Person, we can help on most matters. We are present on 11 of the 12 FCA/PRA Lots and have significant experience delivering Skilled Person Reviews over a wide range of topics, across sub-sectors and for different types of businesses.
As a Skilled Person we are required to be expert, independent and to make evidence-based judgements. Our work must meet the high standards set by the regulators and is carefully planned to be efficient. We monitor plans and costs and keep you updated on progress and our reports are clearly drafted and action focused.
We can also provide support to help you navigate a s166 where we are not the Skilled Person.
If you would like to discuss how we can help, please contact our team - Leigh Treacy, Fiona Raistrick, Richard Barnwell, Mads Hannibal.