Law firms lose out to accountants on FCA investigation work
Regulator has not turned to any law firm to conduct skilled person investigations over the last six months
May 31, 2015 at 07:03 PM
2 minute read
The Financial Conduct Authority (FCA) has turned away from appointing law firms to conduct a raft of investigations of financial institutions in favour of accountants and consultants, according to official figures.
The FCA can commission reports from designated 'skilled persons', including law firms, when the regulator has concerns about a financial company's activities or wants further analysis.
But figures for the period from the beginning of October 2014 to the beginning of April 2015, published last week, show that the FCA ordered 29 'skilled person reviews' but that no law firms were appointed to do them.
Accountant Deloitte was the big winner, being appointed to do 10 reviews over the period.
Seven law firms including Ashurst, Clifford Chance, DLA Piper, Eversheds and Hogan Lovells have spots on the FCA's skilled person panel.
Since the roster began in April 2013, at least six mandates have gone to law firms, acting on investigations across financial crime, conduct of business and client assets concerns.
DLA, Macfarlanes, Eversheds and Hogan Lovells are all known to have previously picked up investigations work from the FCA.
The skilled person reviews can look at, among other things, governance, controls and risk management frameworks, conduct of business and financial crime.
The FCA's website states that for any particular investigation the regulator will "conduct a tender process, where appropriate, to identify the most suitable skilled person firm".
This includes an assessment of technical capabilities, resources available, conflicts of interest and commercial aspects.
The lack of law firms winning work on the FCA reviews contrasts with the sector's success at winning similar work from the FCA's sister body, the Prudential Regulation Authority (PRA).
Its panel for its own reviews contains the same seven law firms as the FCA's panel.
It is understood that of the 12 PRA reviews commissioned over the same two quarters as the most recent FCA figures, multiple mandates have gone to law firms.
One partner who works with both the FCA and PRA said: "PRA referrals are more likely to be accountant led if it's about capital adequacy or issues around the balance sheet, but we should be getting more of the work around conduct."
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