Charge ahead to get ready for RMAR changes
Julie Hepworth, group regulatory manager, Perspective Financial Group, details the new regime which the RDR is imposing on advisers for their retail mediation activities returns
In May, the FSA published consultation paper CP11/08: Data Collection, which addresses issues on its RDR rules on adviser-charging and professionalism.
It sets out proposals for new requirements to be added to the regular retail mediation activities return, or RMAR, for the collection of adviser and consultancy-charging revenue, payment methods, client numbers and charging structures.
The policy statement which will follow this consultation providing feedback is planned for the second half of 2011 and it is expected that the new rules will come into effect on December 31, 2012.
The introduction of adviser and consultancy-charging rules brings about the need for the FSA to collect disaggregated data.
Advisers will have to provide the regulator with considerably more data following the RDR and amendments and improvements to data capture processes will have to be made.
This new data will be collected via new sections added to the RMAR. Any commission received from legacy business will continue to be reported as per current requirements.
The changes for advisercharging revenue are summarised in the table here.
The proposals for consultancy charges are aligned with those of adviser-charging.
There will be a considerable impact for advisory practices in making sure they provide the data required by the FSA.
First, advisers will need to reconsider the way in which they internally record new business. These proposed changes to RMAR require-ments will dictate the way in which they record revenue data after the RDR so they will need a back-office system that makes this task manageable.
If advisers are using manual records, they will need to make a number of amendments to the way in which all new business is recorded.
Second, back-office system providers will have to respond by reconfiguring their systems to accommodate these reporting requirements. Firms will require a system that records all new business in the proposed format and produces precise reports to ease the burden of RMAR reporting.
To ensure the business is able to meet these new requirements, firms can get a headstart by considering each point in the table above and thinking about what internal changes are needed to be able to provide accurate data in their RMAR. If their back-office system is not already capable of capturing and producing the new data, firms should find out from the provider what changes they will be making to help with the proposed reporting requirements and when these are planned to take place.
IFA firms should then consider if these changes are enough to meet their total reporting requirements.
These requirements are only at consultation stage but it is important to plan and prepare as the likelihood of sweeping changes to the outlined proposals is slim. It is better to develop a strategy and system that will ensure these requirements can be met swiftly.