Prudential Regulation Authority Rulebook

2.1

When determining whether to use powers under section 166 or section 166A, the PRA will consider a range of factors relevant to the specific case. These factors include those covered under the headings below.

2.2

The PRA will consider circumstances relating to a firm, including, for example:

1. (i) the attitude of a firm: whether the firm is being co-operative;
2. (ii) history of similar issues: whether similar issues have arisen in the past and, if so, whether timely corrective action was taken;
3. (iii) quality of a firm’s systems and records: whether the PRA has confidence that a firm has the ability to provide the required information;
4. (iv) objectivity: whether the PRA has confidence in a firm’s willingness and ability to deliver an objective report;
5. (v) conflicts of interest: where the subject matter of the report is such that the firm and the PRA would benefit from the view of an external third party; and
6. (vi) knowledge or expertise available to a firm: whether the firm has the required technical expertise.

2.3 to 2.5

Paragraphs 2.3 to 2.5 have been deleted.

2.6

Information about the number and cost of reports by skilled persons is published by the PRA on its website¹, and its Annual Report respectively.

2.7

The PRA will be mindful of costs, particularly because a firm will normally have to pay for the services of the skilled person, irrespective of whether the skilled person is engaged by a firm or contracts directly with the PRA.

2.8

The PRA will take into account relevant factors when considering costs, including, for example:

1. (i) whether a firm may derive some benefit from the work carried out and recommendations made by the skilled person (eg a better understanding of its business and its risk profile, the operation of its information systems, or improvements to its systems and controls);
2. (ii) whether the work to be carried out by the skilled person is work that should otherwise reasonably have been carried out by a firm, or by persons instructed by a firm on its own initiative, for instance a compliance review or the development of new systems;
3. (iii) whether a firm’s record keeping and management information systems are poor and:
   1. a. the required information and documents are not readily available; or
   2. b. an analysis of the required information cannot readily be performed without expert assistance;
4. (iv) the extent to which there appear to be risks that could threaten the safety and soundness of a firm or the protection of policyholders; and
5. (v) the perceived probability and seriousness of possible breaches of regulatory requirements and the possible need for further action.

2.9

When deciding whether to use skilled persons, the PRA will consider whether it has the necessary expertise, whether the resources required are available within the PRA to conduct the review itself, and whether the exercise will be the best use of PRA resources at that time.