SUP 3A.4 Auditors’ qualifications

The FCA is concerned to ensure that the auditor of a relevant institution has the necessary skill and experience to audit the business of the institution to which they have been appointed. This section sets out the FCA'srules and guidance aimed at achieving this.

Before a relevant institution appoints an auditor, it must take reasonable steps to ensure that the auditor has the required skill, resources and experience to perform their functions under the regulatory system and that the auditor:

1. (1) is eligible for appointment as an auditor under Chapters 1, 2 and 6 of Part 42 of the Companies Act 2006; 

2. (2) if appointed under an obligation in another enactment, is eligible for appointment as an auditor under that enactment; or

3. (3) in the case of an overseasrelevant institution, is eligible for appointment as an auditor under any applicable equivalent laws of that country or territory.

An auditor which a relevant institution proposes to appoint should have skills, resources and experience commensurate with the nature, scale and complexity of the relevant institution's business and the requirements and standards under the regulatory system to which it is subject. A relevant institution should have regard to whether its proposed auditor has expertise in the relevant requirements and standards (which may involve access to UK expertise) and possesses or has access to appropriate specialist skill. The relevant institution should seek confirmation of this from the auditor concerned as appropriate.

A relevant institution must not appoint as auditor a person who is disqualified under Part 22 of the Act (Auditors and Actuaries), including as applied by the Payment Services Regulations or Electronic Money Regulations, from acting as an auditor either for that institution or for a relevant class of institution or firm.

If it appears to the FCA that an auditor of a relevant institution has failed to comply with a duty imposed on them, it may take disciplinary measures, including disqualification of the auditor, under section 345 of the Act as applied by the Payment Services Regulations and the Electronic Money Regulations. A list of persons who are disqualified may be found on the FCA's website (www.fca.org.uk).

A relevant institution must take reasonable steps to ensure that an auditor, which it is planning to appoint or has appointed, provides information to the FCA about the auditor’s qualifications, skills, experience and independence in accordance with the reasonable requests of the FCA.

To enable it to assess the ability of an auditor to audit a relevant institution, the FCA may seek information about the auditor’s relevant experience and skill. The FCA will normally seek information in writing from an auditor who has not previously audited a relevant institution. The relevant institution should instruct the auditor to provide a full reply (and should not appoint an auditor who does not reply to the FCA). The FCA may also seek further information on a continuing basis from the auditor of a relevant institution (see also the auditor’s duty to cooperate under SUP 3A.8.2R).