How to Brief a Board Ahead of a Section 166 Skilled Person Review

A Section 166 notice concentrates minds, and it should. The board's role is not to manage the review from the sidelines but to own the firm's response, understand what the regulator is testing, and make sure the skilled person gets what they need to form an honest view. A weak board briefing at the outset is one of the most common reasons firms end up with findings that are harder, and more expensive, than they needed to be.

Key Executive Takeaways

• The board briefing must give directors enough grasp of the scope, cause, and likely findings to challenge management and support full cooperation, not reassure them that everything is under control.
• Treat the skilled person as an independent expert whose job is to form a credible view, and brief the board on how the firm will enable that, including access, evidence, and candour about known weaknesses.
• Surface the hard judgement calls, remediation already underway, resourcing, external counsel, public disclosure, before the review begins, not after the draft report lands.

Start With Why The Notice Was Issued

Boards often receive the Section 166 news wrapped in reassurance. That is a mistake. Directors need an unvarnished account of what prompted the appointment: the supervisory concerns, the correspondence trail, the specific thematic or firm-specific issues the FCA or PRA wants tested. If the notice followed a self-identified issue, say so. If it followed supervisory dissatisfaction with earlier responses, say that too. The board cannot govern the response if it does not understand the regulator's actual concern.

Include the formal scope wording in the pack. Then translate it. What questions is the skilled person really being asked to answer? What would a finding of serious weakness look like in each area?

Set Out The Firm's Current Position Honestly

This is where briefings most often go wrong. Executives present a tidied version of the control environment, hoping the review will validate it. The board then gets blindsided when the skilled person finds what internal audit, risk, or operations already knew.

Give directors a candid read of known gaps, remediation in flight, and areas where the firm's position is genuinely contested. Flag anything where management's view and the second line's view diverge. The board needs to decide, with full information, whether to accelerate remediation before the review concludes or to let findings stand and respond to them properly.

Clarify Roles, Governance, And Decision Rights

Set out who owns the relationship with the skilled person, who signs off on information requests, who reviews draft findings, and how material issues escalate to the board. Nominate a senior accountable executive, usually a SMF holder, and a steering group. Confirm the role of internal audit, legal, and any external counsel. Agree the cadence of board updates: typically monthly at minimum, more often around fieldwork and draft report stages.

Make clear that the skilled person is not a party to be managed. They are to be given full, prompt, accurate access. Any attempt to filter, delay, or shape evidence will be found, and will damage the firm's standing with the regulator far more than the underlying issue.

Prepare Directors For Their Own Role

The skilled person will almost certainly want to speak to NEDs, the chair, and relevant committee chairs. Brief directors on what to expect, what records of their challenge and oversight exist, and what themes are likely to come up. Do not rehearse answers. Do remind them that their job is to give an accurate account of how the board has governed the area under review.

Agree The Difficult Decisions Upfront

Before fieldwork begins, the board should have taken a view on: whether to commission parallel independent work, whether disclosure obligations are triggered, how provisioning for remediation and potential redress will be handled, and what the communication plan is for staff, auditors, and, if listed, the market. Deferring these decisions until the draft report arrives compresses timelines and produces worse outcomes.

What Good Looks Like

A well-briefed board asks sharper questions than management expects, pushes for faster remediation where it is warranted, and treats the skilled person's work as useful intelligence about the firm. A poorly briefed board defers, accepts optimistic framing, and finds itself explaining to the regulator why it did not see what the skilled person did.

The next action is simple: look at the board pack being prepared for the first substantive discussion of the Section 166. If it does not meet the bar above, send it back.

Frequently Asked Questions

How much detail about the regulator's concerns should go in the written pack?

Enough that a director reading it cold understands the specific issues, the history, and the stakes. Sensitivity about distribution is legitimate; vagueness is not. If the pack needs tighter circulation, restrict it rather than dilute it.

Should external counsel attend the board briefing?

Usually yes, particularly where privilege, disclosure, or enforcement risk is in play. Counsel should help directors understand the legal frame without taking over the governance discussion.

How do we handle disagreement between management and the second line about the firm's position?

Put both views in front of the board. The board's job is to understand the disagreement, not to resolve it through consensus. The skilled person will find the disagreement anyway; better that the board has already weighed it.

What if remediation is already underway in the area being reviewed?

Tell the skilled person early, with evidence. Work already done in good faith is relevant context. Hiding it, or overstating its maturity, is far more damaging than acknowledging that remediation is partial.

How often should the board be updated during the review?

Monthly as a baseline, with ad hoc updates when material issues emerge, when the draft report is received, and before any substantive response is sent to the regulator.