Insurers and brokers foot £2.7m bill for FCA reviews

Insurers and brokers footed a bill of £2.7m for FCA-commissioned skilled persons reviews in the latest financial year.

A skilled persons review, also known as a Section 166 report, is commissioned by the FCA to gain an independent assessment of an area of regulatory concern.

The regulator confirmed it had commissioned eight reviews into general insurance and protection firms in the year to 31 March 2024.

Of these, four were conducted by a skilled person chosen by the regulated entity and another four were directly contracted by the FCA.

The information was revealed after consultancy Sicsic Advisory submitted a Freedom of Information request.

Michael Sicsic, managing partner at Sicsic Advisory, said: “Skilled persons reviews can investigate a particular circumstance or topic, as well as into the firm more broadly if the FCA is not comfortable with something it has seen and wants to find the root cause.

“The latter are more problematic because they’re quite broad and can feel like a fishing expedition. They require a lot of preparation.”

Data breakdown

Of those reviews directly contracted by the FCA, one was into a broker and three were into insurers. This resulted in a cost of £1.9m during the year.

Meanwhile, of those conducted by a skilled person chosen by the firm under review, two were into brokers and two were into insurers. This was at a total cost of £783,540. 

Sicsic said: “The FCA generally decides to directly appoint a skilled person if there’s less of a relationship of trust with senior management and they want much more control of the whole process.

“We generally tell our clients this is a signal that they need to manage the relationship with the FCA in a better way.

“Sometimes, s166 reviews can be imposed by the FCA because it isn’t clear about the nature of an issue. That highlights the importance of clearly communicating with the regulator proactively, such as informing them of an issue you’ve identified as well as your plan to address any problems that have arisen.

“We advise firms to treat every communication with the regulator as important.”