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FSA reveals how it will police adviser charging

Advisers will have to provide the FSA with data about adviser charging models as part of their regulatory return and submit complaint data at an individual adviser level under proposals by the FSA.

The FSA has published a consultation paper on data collection through the retail mediation activities return and the level of complaint data firms will have to provide about individual advisers.

The regulator plans to extend the level of information collected through the RMAR for all firms that provide retail investment products.

Retail investment advisers will have to breakdown their advising charging structure to notify the FSA whether the firm is providing independent or restricted advice, initial or ongoing advice, and whether payment is collected directly from clients, via product providers or via platforms.

Consultancy charges relating to group personal pension schemes, group self-invested personal pensions and group stakeholder pension schemes will also be subject to the new proposals.

But mortgage brokers and protection advisers, or non-investment advisers, will not come under the proposals.

The FSA says: “The proposed RMAR data will help us to supervise the RDR rules on a business as usual basis from December 31, 2012, at the firm and sector level, and are consistent with the emerging risk model for the Financial Conduct Authority.

The FSA is also planning to link complaint data to investment advisers’ individual reference number, and adding complaints data to existing reporting on individuals.

Firms will have to provide information when a complaint against an adviser involves a claim of more than £5,000, regardless of whether the complaint is upheld or settled.

Firms will also have to report to the FSA when an adviser is the subject of three complaints in any 12 month period.

The consultation period ends on July 8, and a policy statement is expected in the second half of this year. If the proposals are agreed they will come into effect on December 31, 2012.


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There are 22 comments at the moment, we would love to hear your opinion too.

  1. Incompetent Regulators Awards Team 10th May 2011 at 10:57 am

    More control freakery from the WORLD CLASS REGULATOR. The net is closing and the end is nigh for IFAs.

  2. In omitting mortgage advisers from the proposals, the FSA utterly fails to understand the need for a level playing field. Are they saying that there is no risk of consumer detriment in the lending community? If so, they are quite wrong as I’m absolutely certain that many equity release products are sold on high commissions by some of the big firms.

  3. So the RMAR with be extended from a load of bull to a total and comprehensive load of bull.

  4. And so it goes on and on and on ……….

  5. Steven Farrall (Adviser Alliance) 10th May 2011 at 11:26 am

    It’ll fail. In one way or another it will fail. Failure is what the FSA does. It’s very genes are founded in fabianistic/communist failure. It is the child of the LSE – the noted lefty insitution whose alumni, Brown Balls etc etc – were the very architects of the legislation that spawned it. How can doing more box ticking (which may I remind you precipitate a dozen banks into failure) of the type that has previously failed ever be successful? It’s the ultimate stupidity, to keep doing things that don’t work, just in case they might this time.

    Apart from that this is a massive assault on individual freedom. Not just our freedom, but more importantly our clients to do business as they wish with whom they wish.

    But it’s all very well for us to talk to each other on here. The real issue is how we get this message out to everyone else?

  6. Dear FSA

    To make life easier why don’t you just tell me how much too charge.

    Thereby cutting out all the crap.

    By the way I thought you were being closed down

  7. Peter De Souza 10th May 2011 at 11:40 am

    I actually believe this to be a good idea, certainly better than FSA visits etc

  8. The mortgage industry is excluded.

    Is this because mortgages come from banks and banks trade honestly or is it banks are the next dropping off place in certain peoples carrers.

    Banks and regulators have been seen to be great friends in the past.

  9. Bearing in mind the fact so many banks are state owned now. How about they test the ability of the banks to provide the info they want before trying to impose them on us. Then compare the stats they are given against what really happened rather than what the bank staff wrote down to get their line manager off their back.
    I used to get in to terrible trouble when I worked for a bank when I actually put down ACCURATE figures for clients seen compared to business written as I didn’t see enough clients according to their statistics, but all it was, was that everyone else LIED to keep their line manager off their back and I wouldn’t.

  10. More lunacy !!! more reporting, more rules, more chances to put you neck in the hangmans noose,

    Hello darkness my old friend I relish these little chats

  11. Hold on a minute!! 10th May 2011 at 12:17 pm

    Surely the vast majority of firms (the 7000 or so with either one or two advisers ) already provide the complaints data at an individual level in effect.It is therefore fair to extend the scrutiny to the 4000 larger firms who can hide a ‘big hitter’ in their total data. I do think the ommission of mortgage and protection only advisers is a mistake although I suspect in practice there aren’t that many left! The real potential benefit will be to OUT the bank ‘adviser’. The capitulation by the banks over PPI and a bill of £10billion in compensation is definitely giving the boards of these banks cause for reflection.Will Ladbrokes open a book on whether banks will be in the market by 2013 ? And what will be the final odds?

  12. As usual, the standard comments such as lunacy, won’t work, FSA involved so it will be rubbish. Let us have constructive comment and feed it back to the FSA. I have read the paper, assessed its implications and do not have the time to make specific comments (I have elsewhere) but I can summarise my feedback. It demonstrates the naivity, stubborness bordering on stupidity, arrogance and ineffectual regulation that the FSA too often shows. Better to think the FSA is stupid than to publish a CP and prove it. FSA please note, we do not advise just on retail investment products. We give advice on protection, GI, non regulated products, tax and other things. We provide a service which the client does not see as investment advice but financial advice. Advice and charges are not related to product, the size of the investment or the advice area(s) and complaints are not broken down by product area. Besides what is the difference between a complaint against a firm and one against an adviser? If we cannot break down advice now how can we post RDR.
    What is worse, all this data will not help the FSA in its key objectives.

  13. My initial thoughts were as most respondents, that this is yet another pointless waste of time.

    However, if you actually carefully go through the Consultation Paper, I can see the logic for collecting this data. By having info on Adviser Charges, split by class of business, it will enable a check on over charging, and also to see if Insurers’ tied business is undercharging.

    In respect of complaints, by recording these against individual advisers means the FSA can check to see what the firm has done to require any re-training if applicable, as I’m sure the banks currently don’t properly supervise this issue. The Consultation Paper specifically highlights the recent Barclays issue when they mis-sold Aviva funds and points out there were 1,730 complaints about the advice. If the data shows a select number of advisers were at fault, but the firm hadn’t taken any action to deal with why they were mis-selling, this information gives the FSA the ability to be more pro-active. It also means the data follows an adviser if they move onto a new firm.

    However, it’s daft that the proposals exclude mortgage and non-investment insurance products.

  14. … and the names of the individuals regarded by the FSA as being most directly involved in the near collapse of RBS are?

    And will be published when?

    And where?

    … and the names of the individuals at the FSA who failed in their scrutiny of RBS, HBOS and Northern Rock etc are?

    And will be published when?

    And where?

    There is perhaps no greater contrast than these proposals when set against the FSA’s utter inability to name, let alone shame those involved in the banking crisis.

    It demonstrates, if it is even necessary, how far removed from serving the interests of the UK public the FSA are.

  15. So, the FSA publishes a paper, in which it proposes that “all firms that provide advice on retail
    investment products to provide data on Adviser Charging revenue, payment and client
    numbers, and charging structures”

    ….But not firms that do not provide Investment advice……… So, IFAs who give Mortgage advice will need to divulge their charging structures for non investment advice on their RMAR, but Mortgage and Non-Investment Insurance Firms will not have to


  16. Hope all the holier than thou fee brigade are satisfied.

    Not only is one perfectly good remueration system about to be outlawed, but the replacement is going to be policed to death.

    If the fee brigade thought they could charge what they thought their advice was worth, this will come as a proper jolt to the system, it seems you will charge what the regulator thinks your advice is worth and history tells me it wont be any were near as much as you expect.

    Youve helped put all our heads in this noose and it will be tightened methodically now the regulator has complete control of your income.

    Well done !!!

  17. Julian Stevens 11th May 2011 at 10:07 am

    I really don’t have either the time or the inclination to plough through all 69 pages of this latest CP though, having given it a brief scan, I see no section outlining any data on which it’s based. Does any evidence exist of systemic over-charging throughout the IFA sector or is this just a supposition? Everybody knows which institutions charge nothing for advice, for the simple reason that advice, as far as they’re concerned, amounts to nothing more than steering the shortest course possible towards the sale of a product. And, for the implementation of said product, the amount charged is commonly twice what most IFA’s charge. So we know what sector is most in need of policing as far as charges are concerned yet, in spite of this, everybody is to be burdened with the additional reporting requirements of this latest initiative.

    “The Regulators’ Compliance Code is a central part of the Government’s better regulation agenda. Its aim is to embed a risk-based, proportionate and targeted approach to regulatory inspection.” No chance of that here then.

    My eye is caught by para 2.27 of the CP, which says that “For clients paying off their initial adviser charge through instalments, a firm would be expected to record each time a payment is made.” So, for a regular contribution pension plan under which the adviser charge is to be met by way of an agreed percentage deduction from the first 24 months contributions, the firm will be required to record and report 24 separate payments for the implementation of a single product. Great, just what we need in these times of subdued economic activity and ever-escalating regulatory costs. And Hector Sants has the gall to claim before the TSC that the FSA doesn’t have an anti small IFA agenda. The evidence of the FSA’s actions and proposala suggest somewhat otherwise.

  18. Since we are all agreed this is total bullsh.., perhaps the FSA would be honest enough to give us the specification for the bags with which to weigh it and send it to them on a per-crapita basis?

    Just a thought …

  19. Michael Fallas 11th May 2011 at 11:05 pm

    Is there a similar system for how much the FSA charge us all and how much they are paid?

    After all they are in effect putting limits on remuneration of a business.

    How much can one pass on to consumers the cost of providing all this information to the FSA?

  20. Increasingly Frustrated Adviser 12th May 2011 at 9:42 am

    If my client wants to pay me £5000 to arrange a £10k ISA, is it any business of the FSA? (I wish). Surely as long as the client is aware (TCF) and agrees, why is it any business of the FSA? If my fellow IFA down the road only charges 50p and gets the business, thats competition. This is the FSA first step to introducing set charges for advice. Maximum hourly rate or product specific charge is on its way.

  21. What size will the “fines” be for errors in reporting all these fees in the correct format……………I can see some lack of “systems and controls” “fines” for not ticking the right box or entering feees or part fees in the wrong box.

  22. Just a thought re complaint reporting….how do we know whether claim is more than £5000 without doing redress calc….does this mean we have to do calc on all complaints even if they may end up not being upheld? My business carry out redress calcs which is why I noticed this…more cost to industry again?

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