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FCA expects adviser costs to halve following RMAR changes

Changes to the retail mediation activities return, including moving to an annual reporting structure for section K, will come into force in December.

Since 30 June 2013, advisers have had to complete new sections K and L when completing RMAR returns, which requires firms to send the FCA additional information on initial and ongoing advice charges, whether advice is independent or restricted, and how advice is paid for.

In March the FCA consulted on changes to the RMAR, which included moving to an annual rather than six-monthly reporting structure for section K and allowing firms to complete section K on either a cash or accruals accounting basis. The rest of the RMAR will still need to be reported every six months.

The FCA also proposed removing section L, which relates to consultancy charging.

In a policy statement published today, the FCA confirmed it will go ahead with the changes, which will take effect from 31 December.

The regulator has also announced a further change to the RMAR: it will no longer require firms to separately report whether adviser charges were facilitated by a product provider or platform.

The FCA says: “We received some suggestions around how the data collection could be further simplified. A number of respondents said the requirement to separately report whether adviser charges were facilitated by a product provider or platform service provider was particularly onerous.

”Having considered our use of this data, we concluded that the marginal benefits of collecting this breakdown were outweighed by the time and money that firms would save if we stopped it. As such, we have adopted this suggestion so that firms will only be required to report a breakdown of adviser charges by those paid (a) directly by client and (b) those facilitated by a product or platform service provider.”

The consultation paper said the changes to sections K and L will halve the annual reporting cost of advisers from £2.6m to £1.3m.

In today’s paper, the FCA says it recognises the changes may not halve costs for every firm, but it is confident most firms will see some reduction, and remains of the view that costs across the industry will halve.

Money Marketing revealed in September adviser trade and professional bodies were pushing for an urgent review of the RMAR after firms raised repeated concerns over the amount of work involved.

In November the FCA issued a technical note on section K of the RMAR and admitted it had failed to provide firms with enough support on completing the returns. But trade bodies said while the additional guidance was welcome, a full review and more significant changes – including a move to an annual reporting structure – were still needed.


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Incompetent Regulators 29th September 2014 at 12:02 pm

    A drop in the ocean when compared with the £2 billion RDR has cost!

  2. Good gracious! More sense coming from FCA?

  3. The whole exercise was a complete waste of time and money and of no benefit to consumers, the industry or even the regulator I suspect.

    We really need a lot more forward thinking ……………

  4. Progress that can be directly attributed to the representations made by APFA.

  5. It takes us almost no time at all to submit this information as it is part of our accounting system, from which the data is extracted within minutes. All fees and income are attributed to a client and the source is recorded too. We will still have to record it like that, only the date range for the report will change. So we won’t save anything as a result of the change or am I missing something here?

  6. I am confused as well Chris, as the information still needs to be provided. To compile it for 12 months takes twice as long as to compile it for 6 months (unless using certain types of back office system), so the time taken overall remains similar.

    What would have been helpful is to analyse why some of the data requested is needed at all.

  7. Steve, for anyone to claim this would half our costs is really misleading and make you wonder if whoever said it, actually understands what our costs are. Staff costs, Compliance, FSCS levies and PI are the big ones.

  8. As a member of a network, I’ver never had to do one of these returns, though one wonders if they might not be of significantly greater practical value were they to ask what types of business firms are transacting, thereby enabling the FCA to identify potential areas of trouble, such as UCIS or other unregulated investments. Maybe they do, but the FCA just doesn’t actually look at them or, if it does, takes no action on what it sees. Take your pick.

    Are the mechanisms by which intermediaries are getting paid (provider-facilitated adviser charges vs. direct fees) really so monumentally important?

  9. I wonder how much influence APFA had on this.

    Last year they claimed success for the glut in loganberry production in Norfolk

  10. Its all immaterial anyway !! don’t forget this not the only form of reporting we do !! The annual online reporting we have to do ? plus desk based or visit every 3 years !!

    Big deal they have ditched the 6 monthly section K and maybe section L

    Crikey any one would think they (FCA) have acquired some common sense ?

    RMAR is about one thing and one thing only; Money !! how much we are earning and how much they can use to set their budgets (and bonuses) for the coming year !

    As for halving the annual costs; a tad bit optimistic (more like a wild stab in the dark)

  11. Steve, for anyone to claim this would half our costs is really misleading and make you wonder if whoever said it, actually understands what our costs are. Staff costs, Compliance, FSCS levies and PI are the big ones.

  12. I hear too that, as a result of its representations to the Almighty, APFA are claiming credit for the wonderful autumn weather we’re currently enjoying.

  13. if it is half the costs then it must be half the time. I will consider spending half the time on it and then consider submitting either an incomplete or inaccurate return. Or since I am a realst perhaps not !

  14. Gabriel Forms are a complete waste of time for everyone concerned – once produced after days or weeks by the adviser – the FCA do not read them ! On top of this the quality of the content is often manipulated o fit the answers to the questions – to provide the facility – to cross reference. It appears the FCA are unable to read accounts – and with the dodgy accounting practices of accounting professionals – it seems ridiculous that if the FCA cannot trust the Accountants information – how can they expect the man in the street understanding them – or advisers. Gabriel like the other requirements are tedious and long winded – and unread. Given the FCA has destroyed so many practices – and so many advisers have been removed through, thuggery, remedial actions and distress – I find it interesting that the FCA claims ” adviser fees will go down ? ” I only have a sums o level but if you have 100,000 advisers paying £ 5,000 per year = £ 500,000,000 ( plus PI plus cost of financial planning systems plus employees wages = a lot of business to the economy ). To reduce the numbers to some 20,000 @ £ 5,000 = £ 100,000,000 ( less reduced numbers of PI contracts less wages less financial planning systems etc., That does not look like a ” safe business model ” to me ? Of course Cameron has not yet noticed the effect of destruction on Advisers – and the effect on the rest of the area, the industry – and the masses. Like the armed forces Camerons Cuts – without finding replacement employees – is not a viable policy – sound bite against reality. The same holds true for G P Practices – now under Cameron to be open all hours – without the resources or the people to man them ? I wonder what the next Craze for Cameron will be ?

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