Section 166 Review

Firms that receive a s166 notification frequently have an immediate resourcing problem. The areas under review — financial controls, risk management, compliance, AML — are precisely the functions where gaps or weaknesses triggered the review in the first place. Yet those same functions now need to be at their strongest: preparing documentation, responding to the skilled person’s information requests, demonstrating credible management oversight, and building a remediation narrative that shows the FCA the firm is taking the matter seriously.

There are three specific resourcing situations that drive firms to contact FD Capital at this point:

 

1. The function under review is under-resourced or recently vacated

The most urgent scenario. If an MLRO has recently left, a Head of Risk is on gardening leave, or the CFO role has been vacant for months, a s166 notification creates immediate pressure to fill that gap before the skilled person arrives. FD Capital can provide fractional or interim cover within days. A fractional CFO available two to three days per week, or an interim MLRO at full-time hours, can provide the senior accountability and management responsiveness that the skilled person will expect to encounter.

 

2. The existing leadership team needs experienced reinforcement

The skilled person process is resource-intensive. Information requests can be voluminous. Management presentations need to be carefully prepared. Control evidence needs to be organised and narrated. Firms often find that their existing team — competent in running the business — simply does not have the bandwidth or the specific s166 experience to manage the review process while also running the day-to-day function. A fractional senior appointment alongside the existing team provides that additional capacity and brings experience of what skilled persons look for.

 

3. Remediation leadership is needed after the report

A s166 report that identifies material weaknesses typically leads to a period of intensive remediation — rewriting policies, rebuilding controls, evidencing improvements to the FCA. This work requires dedicated senior ownership. It cannot be delivered as a side-project by an already stretched Head of Compliance or CFO. FD Capital places fractional and interim professionals specifically to lead remediation programmes, typically on engagements of six to eighteen months, with a clear brief to close out the s166 findings and restore the FCA’s confidence in the firm’s controls.

FD Capital’s candidates for s166 support engagements are senior professionals with direct experience of operating in FCA-regulated environments, including experience of supervisory engagement, skilled person reviews, regulatory remediation and SMCR accountability. The table below sets out the most frequently placed roles and the specific value each brings to a firm navigating a s166 review.

 

Role	Why Needed in a s166	Engagement Model	Availability
Fractional CFO / Finance Director	Leads management response; owns financial controls narrative; interfaces with skilled person on financial risk governance	Fractional (2–3 days/week) or full interim	Short notice — days
Chief Risk Officer (CRO)	Owns risk framework remediation; demonstrates adequacy of second-line oversight to skilled person	Fractional (2–3 days/week) or full interim	Short notice — days
MLRO (SMF17)	Required if review covers AML/financial crime controls; statutory accountability under POCA 2002	Interim or fractional	48–72 hours
Head of Compliance / CCO (SMF16)	Oversight of compliance framework being reviewed; direct interface with FCA supervisory team	Interim or fractional	Short notice — days
Director of Financial Crime	If review triggered by financial crime failures — AML, KYC, sanctions — specialist leadership needed quickly	Interim or permanent	Short notice — days

 

All candidates placed by FD Capital for s166 support roles are experienced in operating under SMCR where the role carries SMF designation. They will have current or recent Statements of Responsibilities and will understand the personal accountability implications of taking on a senior function at a firm under regulatory scrutiny. This is not a context where experience matters — it is a context where only the right experience will do. FD Capital screens for exactly that.

A fractional appointment — typically structured as two to three days per week on a retained basis — is the most frequently chosen model for firms in a s166 process where the primary issue is capacity rather than a complete vacancy.

For example:

• A fractional CFO at three days per week can lead the financial controls narrative, own the management response to skilled person information requests, and provide the ExCo-level oversight that the skilled person expects to see — without the cost or lead time of a full-time executive search
• A fractional CRO at two days per week can own the risk framework review, rebuild the risk appetite statement and risk committee governance, and present the remediation roadmap to the FCA — while the firm’s existing risk team handles the day-to-day
• A fractional Head of Compliance at two to three days per week can lead a compliance framework rebuild, own the Conduct Rules training programme, and demonstrate to the FCA that the SMF16 function has the senior capacity and credibility it was previously lacking

 

FD Capital currently has senior finance and compliance professionals actively available for fractional engagements in exactly these disciplines. These are not candidates on a long-term notice period or unavailable for three months — they are individuals with portfolio careers who can take on a new fractional engagement quickly and provide genuine senior value from week one.

Not every FCA intervention is a formal s166 requirement. The FCA frequently uses Dear CEO letters and thematic review findings to signal concerns before taking formal action. A firm that receives a Dear CEO letter identifying weaknesses in its financial crime controls, Consumer Duty implementation, or operational resilience framework has a window — typically three to six months — to demonstrate that it has addressed those concerns before the FCA considers whether to escalate.

FD Capital works with firms at this earlier stage as well. A fractional CFO, CRO or Head of Compliance appointed in response to a Dear CEO letter can often prevent a situation from escalating to a formal s166 requirement by demonstrating credible senior ownership of the issues identified. This is a materially less disruptive and less costly intervention than responding to a live s166 process, and FD Capital’s candidates are well suited to both contexts

The FCA uses its s166 power across all supervised sectors, but certain firm types have faced disproportionate scrutiny in recent years:

• Payment institutions and e-money firms — AML and financial crime controls have been the FCA’s primary concern; many smaller payment firms have faced s166 reviews following the Dear CEO letter on financial crime published in 2022 and subsequent thematic work
• Consumer credit firms and buy-now-pay-later providers — Consumer Duty implementation, affordability assessment and vulnerable customer treatment have driven supervisory attention
• Retail investment and wealth management firms — suitability of advice, Consumer Duty outcomes and operational resilience
• Challenger banks and neobanks — AML controls, transaction monitoring adequacy and governance arrangements have been recurring themes
• Insurance intermediaries — fair value assessments and Consumer Duty implementation
• Crypto asset firms registered with the FCA — AML controls and financial crime governance

Section 166 Review — Frequently Asked Questions

How quickly can FD Capital provide support for a firm notified of a s166?

FD Capital can make initial candidate introductions within 24 to 48 hours of receiving a brief. For the most urgent situations — typically where an SMF function is vacant and the skilled person appointment is imminent — we prioritise the search immediately and can often have a fractional or interim professional starting within a week. Our active pool of fractional and interim candidates means we are not starting from scratch for each engagement; we have pre-qualified individuals who are available and familiar with the s166 context.

 

Does a fractional CFO have the authority to interface directly with the skilled person?

Yes. The skilled person process does not require the individuals it engages with to be full-time employees. What matters is that the individual has clear authority and accountability within the firm, is properly designated under SMCR where relevant, and has sufficient knowledge of the firm’s operations and controls to provide substantive responses. FD Capital ensures that fractional candidates placed into s166 support roles have the seniority, regulatory credibility and firm knowledge to engage directly and effectively with the skilled person’s team.

 

Can FD Capital provide support if the s166 is focused on AML or financial crime?

Yes, and this is one of the most frequent requests we receive. AML-triggered s166 reviews require specific expertise — the FCA will expect to see credible MLRO and financial crime leadership able to articulate the firm’s AML risk assessment, explain transaction monitoring rationale, and present a believable remediation plan. FD Capital has MLROs, AMLROs and Directors of Financial Crime available for interim and fractional engagements specifically in this context. See our MLRO Recruitment and Financial Crime Recruitment pages for more detail on these profiles.

 

What is the difference between a s166 review and an FCA investigation?

A Section 166 review is a supervisory tool — it is the FCA exercising its information-gathering and oversight powers through an independent skilled person. It is not, in itself, an enforcement action. An FCA investigation under section 167 FSMA is a separate process where the FCA appoints investigators with formal powers, typically where it suspects a firm or individual of a regulatory breach. A s166 review can, however, provide evidence that leads to an investigation, and firms should treat a s166 notification with the same seriousness they would apply to a formal investigation — both in terms of management response and the quality of senior leadership they demonstrate.

 

How long does a Section 166 review typically take?

Duration varies considerably depending on scope. A narrow review focused on a single control area — for example, transaction monitoring adequacy at a payment institution — may be completed within six to ten weeks. A broader review covering governance, risk management and financial controls at a larger firm can take six months or more. The remediation programme that typically follows a material findings report adds further time — FD Capital’s fractional and interim engagements in this context commonly run for twelve to eighteen months from initial notification to formal FCA sign-off on remediation.

 

Does FD Capital work with the skilled person directly?

FD Capital’s role is to provide the firm with the senior talent it needs to manage the s166 process effectively. We do not act as a skilled person ourselves and we do not provide regulatory consultancy or legal advice. Our candidates — once placed — will work directly with the skilled person as part of the firm’s management team. Firms requiring skilled person services should engage an FCA-approved skilled person firm directly; firms requiring the senior internal leadership to manage and respond to that process should contact FD Capital.

If your firm has received an FCA Section 166 notification, a Dear CEO letter, or is preparing for a supervisory visit and needs to strengthen its senior finance or compliance leadership, FD Capital can help.

We have fractional CFOs available at two to three days per week, interim CROs ready to start at short notice, experienced MLROs familiar with the AML remediation process, and Heads of Compliance who have managed skilled person engagements before. These candidates are on our books and actively available — not hypothetical talent we would need to find.

Call us directly for an urgent requirement. For planned support — ahead of a supervisory visit or as part of a proactive s166 preparation — a short briefing call to understand your firm’s structure, the scope of the review, and the specific functions you need to strengthen is the right starting point.

Call us today for a no obligation initial discussion

Have one of our specialists call you back to discuss your hiring needs.