Regulatory Risk and Rectification – April newsletter

Isio appointed to FCA Skilled Person Panel

A Skilled Person Review is a tool used by the FCA and PRA where they have concerns about aspects of a firm’s regulated activities (or want further analysis) and want to obtain an independent view.

The FCA’s Skilled Person Panel is established by the FCA for conducting directly commissioned s166 reviews, (i.e. where the FCA itself appoints a Skilled Person to review and report on specific issues at regulated firms). Isio is one of a number of organisations that have been appointed to the panel.

Whilst the FCA has the power to directly appoint Skilled Persons, most s166s are not directly appointed by the FCA. Instead, the FCA typically requires firms to put forward nominations of a Skilled Person and once agreed the firm itself will contract with the Skilled Person. In these circumstances, whilst firms do not have to select from the Panel, Panel members are likely to have the right skills, experience and credentials to meet the FCA’s expectations.

The Panel is divided into ‘Lots’ designed to cover the different types of skills and knowledge needed across the regulatory landscape. Isio was successful in being appointed to the Skilled Person Panel for both Lots we applied for:

Lot C – Controls and Risk Management Frameworks

This covers assessments of a firm’s controls and risk management arrangements, including risk identification, monitoring and management across conduct, operational, and financial resilience risks. Typically, it would cover reviews looking at the effectiveness of Risk, Compliance and Internal Audit functions, and firms’ use of systems and controls and MI to manage risk.

Lot D – Conduct of Business

This covers assessments of a firm’s compliance with the Consumer Duty and the Conduct of Business Rules, including product governance (design, manufacture, and distribution), price and fair value, consumer understanding, and consumer support (including vulnerable consumers). Typically reviews under this Lot would cover the advice process and procedures, past business reviews, file review sampling, and redress exercises.

Consultancy Services

Isio has also been appointed to Lots to provide specialist consultancy services to the FCA. This includes supporting the FCA with resource augmentation where required and providing expert financial analysis to assist the FCA in its regulatory work.

Our appointment

Our team has extensive experience of undertaking skilled person reviews, having led both FCA and firm-appointed s166 reviews.

Our appointment to the panel reflects the strength of our capabilities and the subject-matter expertise our team brings to deliver robust high-quality reviews.

How can Isio help?

Where firms are preparing for a Skilled Person review, we provide practical Skilled Person experience, regulatory insight and a pragmatic and proportionate approach.

Acting as the Skilled Person

• We are able to act as the Skilled Person on Skilled Person reviews under Lot C and Lot D. Being on the FCA Skilled Person panel provides firms with the confidence that our expertise and approach is of a high quality and can be relied upon.
• Through our practical experience of delivering Skilled Person reviews, we have developed a tried and tested approach. However, we also understand that every firm and review has specific circumstances, thus we tailor our approach and processes to the specifics of the firm and the regulator’s requirements.
• We focus on developing an approach that is proportionate to the firm’s business model and risk profile whilst delivering against the regulator’s expectations and requirements.

Providing Skilled Person support to the firm

• Where a Skilled Person has been appointed, we can support firms with navigating the Skilled Person process. Skilled Person reviews can be complex, requiring strong management of the process
• We use our experience to support firms throughout the process, freeing up management time to continue to focus on the core business. We support with project management, managing communication with the Skilled Person and regulator and supporting in challenging findings and recommendations.
• In our experience, proactive engagement and management by a firm throughout the Skilled Person review can significantly improve outcomes and give confidence that the Skilled Person Report and recommendations accurately reflect the firm’s position.

FCA Consultation Paper – Simplifying Pensions and Investment Advice (CP26/10)

The FCA has published CP26/10, proposing changes to the suitability rules aimed at creating more flexibility for advice providers to offer a range of services, in the expectation that this will improve access to retail investments. The consultation closes on 22 May 2026.

The proposed changes to look to:

Simplify and standardise suitability requirements

• Combine COBS 9 and COBS 9A into a single suitability chapter with the same rules applying to all pensions and investment advice.
• Requiring Suitability Reports to be issued before transactions for all advice on investments, removing the exemptions (apart from changes to regular contribution investments).

• Removing specific rules where the Consumer Duty now renders them redundant.

Encourage the development of new simplified advice services

• Allowing firms to take a risk-based approach with respect to information gathering, with simpler products requiring less information collection.
• Revising the requirements for assessing knowledge and experience, and removing it for simple products that are suitable for those without experience.
• Confirming that assessing attitude to risk for simple products does not necessarily require the use of a complex tool.
• Confirming that firms can take a proportionate approach to assessing capacity for loss.

Clarify the requirements for ongoing advice services

• Replacing the annual review requirement for MIFID and insurance-based investment suitability reviews with appropriate periodic reviews.

• Confirming that less frequent reviews may be appropriate for some services where this is appropriate for the target market and represents fair value (e.g. a lower cost, lower frequency service for clients in early accumulation phases).

• Allowing firms to design their own ongoing service models, provided they meet Consumer Duty requirements.

• Clarifying that firms can charge for ongoing services that do not include suitability reviews, provided they meet the Consumer Duty requirements.

What this means for firms

The FCA’s proposed changes are in line with their shift to more principles-based, outcomes focused, and less prescriptive regulatory standards. The regulator acknowledges that the rule changes are modest. Most of the COBS requirements will remain unchanged and the few rules that are being removed are minor. However, the FCA’s hope, and expectation is that the simplified rules and new guidance will give firms the certainty and confidence they need to provide a wider range of different services to more clients, expanding the retail investment market. The key to this is firms’ willingness to take risks in streamlining the advice process where it is appropriate to do so.

There will be opportunities for firms, but there is a need to ensure that any propositions are compliant with the Consumer Duty, and are supported by effective risk management and controls. The FCA has indicated that they will be keeping a close eye on how firms react to this, stating that multi-firm reviews will follow the policy changes.

How can Isio help?

Isio offers a range of services to support firms in managing regulatory risk, strengthening controls and responding to evolving FCA expectations. These include:

• Independent assurance on procedures, processes, controls, and risk management.
• Independent outcomes testing – file reviews for pensions and investment advice, mortgage advice and insurance advice.
• Outsourced redress and remediation exercises.
• Consumer Duty implementation assurance.
• Advice on regulatory change and interactions with regulators (including preparing for s166 reviews).