How to Build a Credible Section 166 Skilled Person Review Response Plan

A Section 166 notice is not a routine information request. It is a signal that the FCA or PRA has lost sufficient confidence in your firm's own account of itself to commission an independent view. How you respond in the first 30 days shapes the tone of the entire review, the scope of the final report, and what supervisors do next. Most firms underestimate this and treat it as a document production exercise. That is the first mistake.

Key Executive Takeaways

• A Section 166 response plan is a governance exercise, not a compliance one: the board must own it, and the executive must resource it as a priority workstream with dedicated capacity.
• The scoping phase determines almost everything that follows, so invest disproportionate senior time in shaping the terms of reference and the skilled person's methodology before fieldwork begins.
• Credibility with the regulator is built through what you volunteer, not what you defend: firms that pre-empt findings with their own remediation plans consistently fare better than those that wait to be told.

Treat the notice as a board matter from day one

The moment the notice arrives, convene the board or a designated committee. Appoint a single accountable executive, usually the CRO or a non-executive, to own the response. Establish a steering group with legal, compliance, the relevant business head, and communications. Set a weekly cadence with the CEO and a fortnightly cadence with the board. If you delegate this to a project manager reporting into second line, you have already signalled to supervisors that you do not grasp the seriousness.

Document every decision. The regulator will later ask how the firm governed its own response, and the answer needs to be defensible.

Shape the scope before it hardens

The skilled person's terms of reference are typically drafted by the regulator and refined in dialogue with the firm and the reviewer. This is the highest-value window in the entire process. Vague or expansive scope invites findings you did not anticipate. Overly narrow scope risks a follow-on review.

Push for precision on the period under review, the populations to be tested, the methodologies to be used, and the standards against which conduct will be assessed. If the reviewer proposes a sampling approach, understand it before it is agreed. If certain matters are already subject to internal remediation, make that visible early so the reviewer can consider it in framing their work.

Good looks like: a terms of reference document that a reasonable third party could read and predict what the report will cover. Bad looks like: open-ended language that lets scope drift throughout fieldwork.

Build the evidence base you wish you already had

Before the skilled person requests anything, run your own pre-mortem. What would a competent independent reviewer find if they walked in tomorrow? Where are the weak controls, the undocumented judgements, the policy-versus-practice gaps? Commission an internal readiness review, ideally with external counsel privilege where appropriate.

This serves two purposes. It lets you fix what can be fixed before findings crystallise. And it lets you provide the reviewer with a coherent, self-aware narrative rather than a defensive one.

Manage the skilled person relationship deliberately

The reviewer is independent, not adversarial. Treat them professionally, provide access without friction, and respond to information requests within agreed timelines. Assign a dedicated liaison team so requests do not get lost across the business.

Where you disagree with an emerging finding, engage on the substance with evidence, not tone. Reviewers respect challenge that is precise and dislike challenge that feels political. If you sense scope creep, raise it early and in writing.

Pre-empt the remediation plan

The strongest position at the end of a Section 166 is not "we accept the findings." It is "we identified most of these ourselves, here is what we have already done, and here is our plan for the rest." Start the remediation plan in parallel with the fieldwork, not after the report lands. Track it through the board with the same discipline as the response itself.

The decision in front of you

Before your next steering meeting, ask one question: if the skilled person submitted their draft report tomorrow, would the firm's own account of what happened, what it means, and what you are doing about it be more credible than theirs? If the answer is no, that is where your effort belongs this week.

Frequently Asked Questions

Should we use external counsel throughout?

Yes, for privilege, for scoping negotiations, and for any findings with potential enforcement implications. But do not let counsel own the response. Ownership sits with the executive and the board.

How transparent should we be with the skilled person about known issues?

Transparent. Reviewers will find material issues regardless, and the credibility cost of appearing to conceal is far greater than the cost of disclosure. Volunteering issues also lets you frame them.

What should we tell the wider organisation?

Enough that the people who need to cooperate understand why, and no more. Uncontrolled internal communication creates inconsistent messages and can compromise the review.

When should we brief the board in full?

At notice, at scoping, at fieldwork completion, at draft report, and at final report. Between those, the accountable executive briefs the chair.

How do we know if the review has gone well?

A well-run review ends with a report the firm can accept, a remediation plan already substantially in flight, and a supervisor who is more confident in the firm's leadership than they were at the outset. If any of those three are missing, the response was incomplete.