Demystifying a s166

Forensic & Litigation Consulting

October 22, 2015

A Section 166 (“s166” or “a review”) from the PRA or FCA can strike fear into any firm, commonly seen as costly, time-consuming and potentially damaging to reputations. In this article, Lester Pereira, Managing Director in our Governance, Risk & Regulation team, debunks some of the common myths surrounding such reviews and offers tips on how you can achieve a fair outcome for your business and the regulator.

So Why the Need for a s166?
A s166 is part of the regulator’s supervisory arsenal. Where the regulator has concerns about a firm’s activities, a s166 may be used to obtain an independent view which is carried out by a Skilled Person (“SP”) firm. SPs are predominantly professional services or law firms who have been appointed by the regulator.

A Regulator Could Use a s166 For:

  • identifying, assessing and measuring risks
  • monitoring purposes, to track identified risks
  • preventative action, to limit or reduce identified risks
  • remedial action, to respond to crystallised risks.

Tips for a Successful s166
Responding to a s166 in a timely and co-operative manner is essential to help minimise any potential enforcement action and maintain your relationship with the regulator. Here we share some tips on how you can successfully navigate a review:

  • Anticipation. There is often a significant amount of time between the regulator indicating a s166 will be issued and the official notification letter. Use this time to address issues the regulator has concerns about.
  • Keep your Board and Senior Executives informed. The regulators will want to see that these groups were made aware of the severity of the issues and the likely s166, as well as remain aware of developments throughout the review and actively support remediation requirements.

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