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Confusing cost of Section J

Tony Byrne’s excellent article in Money Marketing (August 24) must have struck a chord with very many IFAs. On December 24, 2005, three of our nine advisers effectively retired. They did not intend to return after Christmas, deeming Christmas a good time to finish, and so finished employment with us prior to December 31, 2005. Due to pressure of work, the holiday period, our pending RMAR and the need to prepare audited accounts, we completed the Form Cs in early January 2006 – within the statutory time limit. Our RMAR return (and audited accounts) were due on January 31 and we knew that at Section J the RMAR return states: “RMAR Data Required for Calculation of Fees.” We assumed, therefore, that if we had the advisers off our books by January 31, 2006, the date of our return, we could enter the lower number of 6 at Section J and therefore pay a lower fee. After all, every other part of the RMAR return is based on data to January 31. Not Section J. Section J has a hidden clause in the help pages that says the number of investment advisers you should enter in Section J is the number at December 31, 2005 – not the date of the return. Based on our wrong assumption, we put the date of each adviser leaving on the Form C as early January 2006, the date the forms were sent off, even though the adviser’s contracts with us had finished by December 31, 2005. What we should have put and which was in effect true was December 24, 2005. Now we have ended up paying circa 5,000-6,000 for three advisers that we could reasonably and fairly argue finished in December 2005. The FSA will not budge – in their view, our advisers left in January even though we can prove that they finished in December. We were advised by the FSA that the rules are what they are and in such circumstances, when we are unsure of them, we should contact the FSA. Incidentally, how do you know when you are unsure of them? If we were to present our clients with terms of business with confusing and inconsistent clauses like that in the RMAR return, which allowed us to charge our clients any one of two differing fee rates, I am sure we would be asked by the FSA to charge the lower fee. Quite right too. Still, it is nice to know that our excess will help fund the FSA’s pension deficit. Given that our firm has never had a single complaint, the size of the fee, the FSA’s attitude to their clients and the points that Tony makes on behalf of us all, you may perhaps understand our feelings of, and I use the words carefully, hatred towards the FSA. Their hypocrisy and double standards leave us cold. How can any IFA respond positively, as they should, to the reasonable concepts of treating customers fairly and principle-based regulation when the regulator does not act accordingly? However, whatever ones feelings about the subject of fees, even with the extra we have to pay, our fees only represent 4 per cent of our turnover. Furthermore, for a large part of last year, we had far more advisers employed than the number that were used to calculate our last fee. Swings and roundabouts I guess, so let us keep the fee issue in some sort of perspective. It is time to move forward. Name and address supplied


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