Richard Farr, Working Group Chair at The Association of Professional Compliance Consultants (APCC) discusses why the APCC has worked to expand the Skilled Person Panel in order to level the playing field and give great clarity to the industry.
The Financial Conduct Authority (FCA) plays a crucial role in safeguarding consumers and promoting market integrity within the financial services sector. One key tool their arsenal is the Requirements Notice (RN). This instructs a regulated firm to commission an independent review of specific aspects of its operations by a Skilled Person. The Skilled Person acts as an objective party, analysing the firm’s compliance within FCA regulations and reporting back to both the firm and the FCA supervisor on the outcome. At the moment the FCA maintains a panel of Skilled Persons. Whilst this panel offers a pool of qualified experts, it can often present challenges for the small to medium sized regulated firms which, let’s be honest, represent most of the industry at this time. These challenges predominantly stem from a David and Goliath scenario; in short, there is a dominance of larger, corporate professional services firms within the panel.
And of course, these larger firms often come with hefty price tags and a corporate culture that may not necessarily be the best fit with the smaller or mid-sized regulated firms. Not only does this mean that the smaller or mid-sized firms are limited in their choices, but the dominance of large firms often restricts the pool of potential Skilled Persons too, thereby limiting regulated firms’ ability to choose a consultant who best suits their specific needs and budget.
And whilst the Financial Services and Markets Act (FSMA) and FCA guidance clearly states that firms are not obligated to choose from the published panel, there still seems to be some misconceptions about the selection process and some firms still seem unaware that they have the flexibility to nominate suitable alternative firms, provided they can demonstrate the necessary expertise.
This spurred us at APCC into action; we felt it was time to level out the playing field.
We want to be able to provide all sizes of regulated firms with a wider range of options, thereby fostering competition, and enhancing the overall effectiveness of the Skilled Person process. We thus established the Additional Skilled Person Supplier List.
This list mirrors the FCA Panel as much as possible. We wanted to replicate the FCA’s panel structure, encompassing the same “Lots” (specific areas of expertise) as defined by the FCA. That being said, we also wanted to avoid duplication and confusion. As such, firms already listed on the FCA panel for a particular Lot are not included in the APCC list for the same Lot. However, they can be included for other Lots where they possess relevant experience. Ensuring information is up to date, correct and accurate is paramount, and thus our list will be refreshed annually, ensuring continued relevance and expertise.
The regulated firm is still responsible for assessing the individual appropriateness of a Skilled Person firm for its particular requirements and should consider the Handbook guidance when appointing them. The guidance suggests a skilled person firm must appear to the FCA to have the skills necessary to make a report on the matter concerned or collect or update the relevant information. A rigorous selection process is also essential and thus firms seeking inclusion on the APCC list will need to demonstrate their qualifications through three key areas:
- Contractual Compliance: Meeting the contract terms stipulated by FCA’s Supervisory Statement (SUP) 5.5.
- Proven Experience: Providing evidence of at least one completed Skilled Person report.
- Requirements Notice Track Record: Demonstrating involvement in responding to RNs within the relevant Lot over the past 24 months.
We will also conduct an independent review too. All applications will be reviewed by a dedicated panel comprising at least two APCC members (with Skilled Person knowledge) an independent board member and a member of the Executive team.
Our aim is threefold; to benefit client firms, APCC members and the FCA too.
Regulated firms will gain access to a wider pool of qualified Skilled Persons, allowing them to choose a consultant that best aligns with their budget, size, and cultural fit. APCC member firms which meet the selection criteria will gain an additional platform to showcase their expertise, potentially attracting new clients. And the FCA will also benefit from increased competition within the Skilled Person ecosystem, promoting a more efficient and effective regulatory framework too.
It’s time we started to empower regulated firms to navigate the RN process with greater clarity and choice. We believe this is just the start of a more robust compliance environment within the financial services sector.
