We’re barely a whisper into the year and already we’re seeing some big themes re-emerge in the Financial Services sector, and in the Insurance space in particular. Acutely aware that 2024 is an election year in the UK, the FCA are continuing their torrent of section 166 (“s166”) reports, one of the key defensive weapons in their armoury, and are doubling down on CEO’s Nikhil Rathi’s claim that the regulator will take a more “aggressive” stance towards corporate missteps. The sabre-rattling is getting louder.
The s166 trend started to accelerate last year, with FCA data from October showing a spike in skilled persons reports being commissioned in 2023. Indeed, between July and September 2023, the FCA commissioned seven s166 reports across the general insurance and protection sector (compared to the first quarter of the financial year 2023 — April to June — when just one report was commissioned). Only the retail banking and payments sector, with eight s166 reports, had more than general insurance and protection. And that trend is showing no signs of slowing down. Interestingly, the majority of those have been for “governance and compliance”-related issues, with the FCA focused on how they are holding companies to account, particularly around the Consumer Duty, now that the Duty has passed its implementation deadline.
If you have had a s166, or can feel the heat of the regulators breathing down your necks (information requests, observing board meetings, requesting board pack access, scrutinising minutes), there are several steps (proactive and remedial) you can take — and questions you can ask yourself — to ensure your governance and reporting is fit for purpose and passes regulatory muster:
The most important question to ask yourself, however, is that if you do get a s166, are you in a position to respond quickly and effectively? In our experience, when this happens, all other governance priorities immediately go out of the window — which is incredibly disruptive to the rest of your “business as usual” activities. Doing what you can to protect against a s166 report, while you have the time and space to do so, could therefore be a smart move.
If you’d like to know what best-practice reporting looks like, or know more about how to make sure your governance and reporting is fit for purpose in the eyes of the regulator, get in touch — or fill out our free board reporting assessment tool to score your papers.