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EG 3.3 1Reports by skilled persons (section 166)

EG 3.3.1RP

1Under section 166 of the Act, the FCA has a power to require a firm and certain other persons to provide a report by a skilled person, or itself to appoint a skilled person to produce such a report. The FCA may use its section 166 power to require reports by skilled persons to support both its supervision and enforcement functions.

EG 3.3.2RP

1The factors the FCA will consider when deciding whether to use the section 166 power include:

  1. (1)

    If the FCA's objectives for making further enquiries are predominantly for the purposes of fact finding i.e. gathering historic information or evidence for determining whether enforcement action may be appropriate, the FCA's information gathering and investigation powers under sections 167 and 168 of the Act are likely to be more effective and more appropriate than the power under section 166.

  2. (2)

    If the FCA's objectives include obtaining expert analysis or recommendations (or both) for, say, the purposes of seeking remedial action, it may be appropriate to use the power under section 166 instead of, or in conjunction with, the FCA's other available powers.

EG 3.3.3RP

1Where it exercises this power, the FCA will make clear both to the firm and to the skilled person the nature of the concerns that led the FCA to decide to appoint a skilled person and the possible uses of the results of the report. But a report the FCA commissions for purely diagnostic purposes could identify issues which could lead to the appointment of an investigator and/or enforcement action.

EG 3.3.4RP

1Under section 166A of the Act, the FCA also has a power to require a firm to appoint a skilled person to collect or update information, or itself to appoint a skilled person to do so, where it considers that the firm has failed to provide information required by the FCA or update information previously provided to the FCA.

EG 3.3.5RP

1Chapter 5 of the FCA's Supervision manual (Reports by skilled persons) contains rules and guidance that will apply whenever the FCA uses the section 166 and 166A powers.