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FCA: RMAR changes show we are different to FSA

David-Geale-MM-Peach-700.jpg

I recognise we ask you to report a lot of information and I also recognise that sometimes it can be a burden but this data is important.

In 2011, we undertook a public consultation on our proposals to collect adviser charging data from investment advice firms. Respondents to this consultation were broadly supportive of the need for the FCA to collect this data and accepted the idea this should be collected as part of the retail mediation activities return or RMAR.  The final rules were published in 2011.

However, over the past few months, as investment advice firms have submitted their data for the first time, particularly RMAR section K, we have seen a number of technical queries coming back to us. We have also seen this reflected in the media, with unhappy advisers quoted in the pages of Money Marketing

We have heard your criticisms and we have had another look at what we are asking you to do.

As an immediate fix, we are providing technical guidance on how you can report through RMAR section K. This should, we hope, help clear any fog that remains.  In drafting the note we have spoken with a number of trade associations to make sure it answers your questions, and the feedback has been good, so we hope this will be a great help. You can find the note on our website.

We have also heard those who report their accounts to HM Revenue & Customs on a cash basis say that calculating a return on an accruals basis creates additional expense.  This is an area we are looking at very closely with a view to allowing these firms to report on a cash basis. We need to look into this further, and it is early days, but I hope we can say more after Christmas.

We are also planning to consult on formally incorporating the contents of the technical note into our handbook, meaning that all information you need to complete the form will be in one place.  

I am afraid I cannot promise we will get rid of reporting altogether. But what I can promise is we will continue to listen to your concerns. With the benefit of hindsight, we recognise that we had not given enough support on this and we have acted quickly to correct it.  Hopefully, you will see that, in doing this, we are different to the FSA and we are more flexible. We have your interests closer at heart.

In return, I ask you to keep talking to us and I would also ask that, when we consult again in future, you give us as much feedback as possible. Feedback last time led us to believe we were heading in the right direction but it now looks like it was not representative of the wider population. My hope is that, together with the industry, this time we get a solution that works for all of us.

David Geale is head of savings, investments and distribution at the FCA

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. A hugely positive step – contrast that with “be very afraid…”

    Now if you’d only listened on unbundling…

  2. Most firms, understand, that the FCA, needs to keep a tight check on firms, but every 6 month return, is a step to far, why we cannot report once a year, to coincide, with our yearly accounts, would take some of the burden of a lot of smaller IFA’s.
    Please Mr David Geale, you seem to be a breath of fresh air, please lift the burden of 6 monthly reporting.

  3. A step in the right direction. However surely the important question is “does the firm meet the minimum capital requirements?” Our firm does that by a substantial margin although only a small concern. Why do we have to keep proving it? Such is a distraction from the main purpose of the company ie to look after our clients! I think they might take that view as well.

  4. The only reason to collect data is to take action. Perhaps the FCA could explain to us what process or action is taken with this data especially when so much of the data is impossible to collate and impossible to respond to? I say this because in many cases the product providers do not produce accurate data to report on and yet the FCA seem to be under the false impression that this is the case. The adage comes to mind: Rubbish in rubbish out. We have PI, we have capital adequacy. Why not just ask us for management accounts and be done with it?

  5. Did he never stop to think that the small IFA firms who previously submitted feedback after feedback on issues directly affecting them, only to be told time after time after time, “thank you for this but we are goingto do it our way regardless”. Hopefully as this article shows the FCA are prepared to listena and act, we can start feeding back more and more to them as it will not fall on deaf ears. I am not stupid enough to think we will always get what we want, but if we can engae with the FCA and they heed what we say then is a real chance of some kind of meaningful relationship between regulator and regulated. This can only be a good step compared to the previous regime who could not care less about us or the clients whose lives were and still are being directly and negatively impacted by their “we know best and this is how it will be” attitude

  6. Not good enough. Naive even.

    There has been and remains a massive disconnect between the FCA and advisers. The FCA are too far away from the coal face to appreciate the detailed problems some IFAs have especially those that give advice. The likes of Mr Geale really do need to visit a few struggling IFAs and get them to show him why we struggle. I have invited the FCA to sit down with us but have had no response. Over the years I have fed back our specific concerns at every possible opportunity including the initial CP but we have been ignored. It is the tactical issues which make life so difficult which sadly few people understand. For example, you can take £3,000 from a protection product by way of commission. You spend three quarters of your billable time sorting out a pension or investment or both. So the same job of work could be reported is so many different ways depending on how payment has been agreed with the client.

    A regulatory framework bridging past and present methods of remuneration crossing the boundaries of pure protection, GI, pensions, life and retirement has rendered reporting advice charges in detail impossible. Factor in idle back office providers who are unprepared to modify their systems just for you so that you can provide consistent data and you are stuck between a rock and a hard place. But to some extent I sympathise with these back office providers. How do you record income split so many different ways – how much (what proportion) is retail investment product, Life & Pensions, Investments, general insurance, pure protection? Money coming from a product does not mean that it is paying for advice in that product area. So you cannot ever split income by product.

    The FCA may be interested in how much a client pays but this depends upon so many factors (complexity of the work, the staff necessary to do the work, the provider involved etc.) that you cannot draw meaningful conclusion from our figures.

    Reading Martin Bamford’s article this morning I was wondering how much time and money he has spent trying to manipulate his systems to report data as the FCA want it only to now find that he can continue in the old manner! What a waste. Stop the messing around FCA. Withdraw section K and get it right so that until that point we do not have to spend more money trying to work with a discredited system.
    But why are we discussing this! Why so much fuss? What we do is so simple! A client pays us for all advice (initial or on-going) based on the number of hours worked multiplied by the hourly rate of the people involved. We then simply invoice them. What is so difficult about that? Nothing! Until the distant and remote FCA get involved.

  7. By allowing each firm to nominate a year end for reporting balance sheet data the FCA would achieve two very simple but effective ends. Each firm would be reporting accurate and easily verifiable information to the regulator, in particular the figures for profitability, balance sheet strength and HMRC standing. At present these figures have to be guesstimated once a year for the very simple reason that accurate data is NOT available. This is a ridiculous state of affairs. I have also found it ridiculous that the figures for cash at bank and other asset values never have to be proven. Why do I pay an accountant to produce a set of accounts for my limited company when the regulator never asks to see them or indeed our weekly bank statements. I go to great lengths to make sure this business is run in strict compliance with every regulatory diktat so to be asked to provide inaccurate information is galling.

    By only requiring balance sheet information at company year end firms would be able to complete GABRIEL faster and the FCA would get workable numbers. I would however have no problem with providing full cash accounting figures monthly if required, with bank statements. This is the true picture of health for a small IFA practice.

  8. Excellent David, and thank-you for taking the time to write this article and to demonstrate that we are seemingly aiming in the same direction!

    Onwards and upwards. Long way to go, but this is a good thing!

  9. I agree with Marty when he says “we have previously submitted feedback after feedback on issues directly affecting us, only to be told time after time after time, “thank you for this but we are going to do it our way regardless”. All the chickens are coming home to roost unfortunately we are paying the price for the FSA Mk11’s lack of use of mouth and ears in the right proportion.

    I would suggest David Geale gets off his arse and phones Sam Caunt as Simon Kershaw and I appear to have the same opinion of the FCA and their ex bank staff (Mr Geale like Simon and I have worked for banks and I suspect know what we thought of the failed advisers who left bancassurance for the then PIA and FSA) Sam might be a little more polite than us!

    Threatening US with fines for submitting everything except section K on time when it is YOUR system which you now admit was nit fit for purpose and/or telling us we can “fudge the figures” because of your own errors is NOT acceptable, nor is continuing to claim bonuses for YOUR failures.

    Telling a client you are regulated by the FCA (same ltd company as the FSA) is a DISADVANTAGE with many clients as they still know how much you cocked up baking regulation.

  10. I think, Phil, that problems with BAKING regulation are down to the other FSA – the Food Standards Agency!

  11. @Peter – Too many cooks spoil the broth, but the FSA could probably do with Paul Hollywood handling the banking and David Geale and Co trying a new career which involves breaking eggs.

  12. And APFA’s proposals for a streamlined, simplified and more relevant data reporting system have been………….. what exactly?

  13. Is David Geale embarrassed about his time at LloydsTSB or is this a slight ommission? Compare his Linkedin CV to his CV according to Citywire….. comments?

    Linkedin

    Experience

    Financial Conduct Authority

    Head of Investment Policy

    Financial Conduct Authority
    September 2012 – Present (1 year 4 months)

    Manager – Wholesale and General Insurance Thematic Supervision

    Financial Services Authority
    April 2012 – September 2012 (6 months)
    Manager of the Thematic Supervision team covering both wholesale and general insurance

    Financial Services Authority

    Sector Manager

    Financial Services Authority
    April 2009 – March 2012 (3 years)
    Sector Manager for Retail Intermediaries and Mortgages

    Financial Services Authority

    Retail Investments Policy Manager

    Financial Services Authority
    2005 – April 2009 (4 years)
    Policy Manager at the FSA responsible for a number of key areas and projects including:
    – Product Disclosure
    – Financial promotions policy
    – Consumer Responsibility
    – Depolarisation implementation

    Financial Services Authority

    Associate Retail Investment Policy

    Financial Services Authority
    2002 – 2005 (3 years)

    Education

    University of Plymouth

    University of Plymouth

    BA(Hons), Business Studies with Marketing
    1989 – 1993

    New Model Adviser

    2012-present FSA, head of investment policy

    2009-12 FSA, sector manager, investments policy

    2005-09 FSA, retail investment policy manager

    2002-05 FSA, associate, retail investments policy

    2001-02 Charcol, independent financial adviser and mortgage broker

    1998-2001 Self-employed financial adviser/mortgage broker

    1996-98 Halifax Estate Agencies, mortgage broker

    1993-96 Lloyds Bank, financial adviser

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