CTPS 13.4 Appointment and reporting process

1When the FCA is contracting directly with a skilled person it will itself appoint the skilled person.

1Where the skilled person is appointed by the person in CTPS 13.2.1G or CTPS 13.2.2G, the Act requires that such skilled person be nominated or approved by the FCA:

1. (1)

   if the FCA decides to nominate the skilled person who is to make the report or collect or update the information, it will notify the person in CTPS 13.2.1G or CTPS 13.2.2G accordingly; and

2. (2)

   alternatively, if the FCA is content to approve a skilled person selected by the person in CTPS 13.2.1G or CTPS 13.2.2G, it will notify the latter person of that fact.

1Where the person in CTPS 13.2.1G or CTPS 13.2.2G is selecting the skilled person, the FCA may give that person in CTPS 13.2.1G or CTPS 13.2.2G a shortlist from which to choose.

1Where a critical third party is contracting with a skilled person, it remains the critical third party’s responsibility to assess the individual appropriateness of the skilled person.

1As part of the decision-making process, the FCA will normally contact the person in CTPS 13.2.1G or in CTPS 13.2.2G to discuss its needs before finalising its decision to require a report or the updating or collection of information by a skilled person. This will provide an opportunity for discussion about:

1. (1)

   the appointment;

2. (2)

   whether an alternative means of obtaining the information would be better;

3. (3)

   what the scope of a report should be;

4. (4)

   who should be appointed;

5. (5)

   who should appoint; and

6. (6)

   the likely cost.

1A skilled person 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 skilled person may be an accountant, lawyer, compliance consultant, actuary or person with relevant business, technical or technological skills.

1When considering whether to nominate, approve or appoint a skilled person to make a report or collect or update information, the FCA will have regard to the circumstances of the case, including whether the proposed skilled person appears to have:

1. (1)

   the skills necessary to make a report on the matter concerned or collect or update the relevant information;

2. (2)

   the ability to complete the report or collect or update the information within the time expected by the FCA;

3. (3)

   any relevant specialised knowledge, for instance, of:

   1. (a)

      the person in CTPS 13.2.1G or CTPS 13.2.2G;

   2. (b)

      the type of business carried on by the person in CTPS 13.2.1G or CTPS 13.2.2G;

   3. (c)

      the services provided by the critical third party; and

   4. (d)

      the matter to be reported on or information to be collected or updated;

4. (4)

   any professional difficulty or potential conflict of interest in reviewing the matters to be reported on, or the information to be collected or updated, for instance because it may involve questions reflecting on the quality or reliability of work previously carried out by the proposed skilled person; and

5. (5)

   enough detachment, bearing in mind the closeness of an existing professional or commercial relationship, to be able to collect or update the information or to give an objective opinion on matters such as:

   1. (a)

      matters already reported on by the skilled person; or

   2. (b)

      matters that are likely to be contentious and may result in disciplinary or other enforcement action against the person in CTPS 13.2.1G or CTPS 13.2.2G, its management, shareholders or controllers; or

   3. (c)

      matters that the skilled person has been involved in, in another capacity (for example, when a skilled person has been involved in developing aspects of a systemic third party service, it may not be appropriate for them to provide a subsequent opinion on the adequacy of that service).

1In appropriate circumstances, it may be cost effective for the FCA to nominate or approve the appointment of, or appoint itself, a skilled person who has previously acted for, or advised, the person in CTPS 13.2.1G or CTPS 13.2.2G.

1The FCA may require a report by a skilled person under section 166 (Reports by skilled persons) of the Act on any matter if it is reasonably required in connection with the exercise of the FCA’s functions conferred by or under Chapter 3C (Critical Third Parties) of Part XVIII (Recognised Investment Exchanges, Clearing Houses, CSDs and Other Parties) of the Act.

1If the skilled person appointed to make a report under section 166 (Reports by skilled persons) of the Act is appointed by the person in CTPS 13.2.1G, the FCA may require the report to be in whatever form it specifies in the notice to the person concerned.

1The FCA will give written notification to the person in CTPS 13.2.1G or CTPS 13.2.2G of the purpose of the report or collection or updating of information, its scope, the timetable for completion and any other relevant matters. The FCA will state the matters which the report is to contain, or the information which is to be collected or updated, as well as any requirements as to the report’s format.

1The FCA attaches importance to:

1. (1)

   there being a timetable for each report or collection and updating of information; and

2. (2)

   the skilled person, with the cooperation of the person in CTPS 13.2.1G or the critical third party in CTPS 13.2.2G, as relevant, keeping to that timetable.

1The written notification in CTPS 13.4.11G may be preceded or followed by a discussion of the FCA’s requirements and the reasons for them. This may involve the FCA, the person in CTPS 13.2.1G or in CTPS 13.2.2G and the person who has been, or is expected to be, appointed as the skilled person. The FCA recognises that there will normally be value in holding discussions involving the skilled person at this stage. These discussions may include others if appropriate.

1The FCA will wish to conduct the discussion with the critical third party, the skilled person and any others within a timescale appropriate to the circumstances of the case.

1Where enforcement action is anticipated as a likely outcome, the FCA would normally signal this to the skilled person prior to work commencing as this would impact the type of evidence which should be provided in support of the findings in the skilled person report.

1Where the skilled person is appointed by the person in CTPS 13.2.1G or CTPS 13.2.2G, the FCA will normally require the skilled person to be appointed to report to the FCA through that person.

1Where the skilled person is to be appointed by the FCA itself, the skilled person will report directly to the FCA.

1Regardless of how the skilled person is appointed, they will usually be in regular contact with the FCA throughout the process.

1. (1)

   1The FCA expects the skilled person normally to give a periodic update on progress and issues during the engagement, the frequency of which is to be discussed with the FCA. This should allow for a re-focusing of the report if necessary.

2. (2)

   Where the skilled person is appointed by the person in CTPS 13.2.1G or CTPS 13.2.2G:

   1. (a)

      the channel of communication would normally be directly between the skilled person and the FCA; and

   2. (b)

      the skilled person would usually be expected to keep the critical third party or other person informed of any communication between the skilled person and the FCA.

1It may be appropriate for the skilled person to communicate matters of material significance to the FCA set out in CTPS 13.5.1R(1)(b) without first informing the critical third party. The same applies to equivalent material in the case of another person in CTPS 13.2.1G or CTPS 13.2.2G.

1If the FCA is considering asking for additional information during the engagement, it will take into consideration the cost of the skilled person complying with the request and the benefit that the FCA may derive from the information.

1. (1)

   1In most cases, the FCA will not need to request a skilled person to give it source data, documents and working papers.

2. (2)

   However, the FCA may do so when it reasonably believes that this information will be relevant to any investigation it may be conducting, or any action it may consider taking against the critical third party or other person.

1. (1)

   1The FCA will normally specify a time limit within which it expects the skilled person to deliver the report or collect or update the relevant information.

2. (2)

   The skilled person should take reasonable steps to achieve delivery by that time. Where the skilled person is appointed by the critical third party, this will be part of its contractual duty under CTPS 13.5.1R.

3. (3)

   If the skilled person becomes aware that the report may not be delivered, or collection or updating of the relevant information may not be on time or within cost estimates, the skilled person should inform as soon as possible:

   1. (a)

      the FCA; and

   2. (b)

      if the skilled person is appointed by the person in CTPS 13.2.1G or CTPS 13.2.2G, that person.

1. (1)

   1This paragraph applies where the skilled person is appointed by the person in CTPS 13.2.1G or CTPS 13.2.2G.

2. (2)

   In the normal course of events, the FCA expects that the person in CTPS 13.2.1G or CTPS 13.2.2G will be given the opportunity to provide written comments on the report or the collection of the relevant information prior to its submission to the FCA.

3. (3)

   The skilled person is expected to provide the FCA with identical copies of any draft report or relevant information at the same time they are issued to the person in CTPS 13.2.1G or CTPS 13.2.2G.

1The FCA may meet with the person in CTPS 13.2.1G or CTPS 13.2.2G and the skilled person together to discuss the final report.

1The FCA may also wish to discuss the final report with the skilled person present but without the person in CTPS 13.2.1G or CTPS 13.2.2G.