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Apfa’s Linda Smith: FCA’s data strategy needs to be overhauled

The FCA has inherited a sprawling data strategy from the FSA but it needs to reduce the reporting burden for low risk sectors, such as financial advisers.

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Reporting has long been an issue for many firms. The FCA is reviewing its data strategy as it recognises industry concerns around data collection as inherited from the FSA.

As an example of the problem that the FCA faces with this review, its business plan for 2013/14 states that it inherited 220 databases from the FSA that hold information for 25 key systems. Not a great starting point!

Apfa believes that increased professionalism of firms since the introduction of the RDR should mean regulatory dividends, including a reduction in the level of reporting.

The FCA’s review is starting with a proof of concept in the UK retail investment market to demonstrate that the work is feasible and beneficial. We call on the FCA to justify the information it collects and to ensure that data is shared across the whole organisation so that duplication does not occur.

There are also some general issues that could be amended around the RMAR that would make a significant difference to firms. The short timeframe within which the data must be submitted presents problems, and it has been suggested that submission 13 weeks from the end of the reporting period would be more appropriate.

Frequency of reporting is also an issue for smaller firms – annual submission rather than six monthly should be sufficient for regulatory purposes for a sector that is low risk. In addition, the level of information required is unnecessarily detailed for routine collection.

Apfa has reviewed the RMAR and considers that some sections need reviewing to ensure that the data is relevant and has a purpose. Those that are particularly onerous include:

  • Section D on regulatory capital needs streamlining. This could automatically draw data from previous returns and link with other sections wherever possible.
  • Section E. PII self-certification could be covered off with a declaration confirming that a firm holds compliant cover with more detail provided if not.
  • Section G. Training and competence data is unlikely to change much between reporting periods so should be pre-populated with data from last return and amended if things change.
  • Section I on supplementary product sales data. PSD is collected from providers and it is unclear what they are trying to achieve here.
  • Section J on data for calculation of fees, to be completed once a year. This could link more intelligently with data required under section B and should automatically draw data from elsewhere wherever possible.
  • Section K on adviser charging. It is difficult to understand how such detailed information is of use to the FCA and why it needs to be reported on a regular basis. If the FCA has concerns about what is happening in the market, it could request data as part of a thematic review rather than include it in the regular reporting pack.
  • Section L on consultancy charging. As with section K, it is unclear why this level of detail is needed on a regular basis.

Sections A, B and C appear to comprise information that is reasonable for a regulator to collect.

We would welcome members’ thoughts on the RMAR: info@apfa.net

Linda Smith is senior technical adviser at the Association of Professional Financial Advisers

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  1. Must agree, our last RMAR on adviser charging was a little in depth shall we say.

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