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Gabriel is no angel for advisers

Natalie Holt, journalist with Money Marketing Photo by Michael Walter/Troika

There are times when I do not envy the lot of advisers. The time when the inevitable, presumably heart-sinking feeling sets in when yet another bill for the Financial Services Compensation Scheme comes through is a case in point. Grappling with regulatory returns and compiling the myriad data sets required by the FCA every six months is another.

Some of these processes can be eased by automation. But the frustration lies not with the burden of supplying the requested data per se, but the overwhelmingly sense that nothing is being done with it.

It would be easier for advisers to get on board with filing their Gabriel return if they could see tangible results, or if the data being collected was serving the greater good – faster detection and action against poor advice firms, for example. Unfortunately this does not appear to be the case.

The FCA asks for a lot of information: details on profit and loss, client money, capital adequacy, professional indemnity cover, adviser charging, and the list goes on. The length and breadth of the regulator’s FAQs published on its website on the various sections of the return is testament to just how complex the process is.

And yet, regulatory costs continue to rise, firms continue to dump liabilities on the FSCS, and no one seems to be any wiser as to how to stem the tide, despite the wealth of information the FCA has at its disposal.

As we reported last week, we are about to enter a whole new phase of regulatory reporting with the dawn of Mifid II, and the requirement to record client calls. The FCA has set aside £45m just to cope with the introduction of the Mifid II rules and the pressure that will put on its reporting systems. Is a similar size of spend needed to overhaul Gabriel overall, to ensure both the regulator and firms get more out of the system?

Gabriel’s raison d’etre, indeed its name, is “gathering better regulatory information electronically.” But this process should not be about mere “gathering”, but also analysing, monitoring and generally putting the information to good use. Otherwise what is the point?

There may also be a bigger role here for the professional bodies. They are on the frontline, and should be able to help spot where professional standards are not being met, and outright regulatory breaches.

There is a risk here of advisers being stuck on an endless data feedback loop – with nobody listening to the results.

Natalie Holt is editor of Money Marketing – follow her on Twitter here

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. The data supplied is mathematically flawed – inconsistent and subject to a myriad of interpretations and cynical manipulation.
    Where the FCA can get assistance is by encouraging firms to use external assessors to look at their firm and indeed there are BS and ISO standards which the FCA arrogantly refuse to encourage. The cost of this is a fraction of FSCS levies and comparable with the cost of recording telephone calls – and you now what? – far more beneficial to consumers.
    One day someone at the FCA will explain why investment firms are not expected to comply to basic standards and demonstrating compliance with them when we expect standards for firms supplying food, medicines etc.
    Are you listening FCA?

  2. Natalie, you deserve a medal for this.

    Not only did I fill in my Gabriel return within two weeks of my accounting period, I can’t tell you the number of times I got a fatuous e-mail querying something or other that was obvious from the content of the return.

    These returns are not scrutinised by a human as far as I can see, but a pretty basic algorithm which throws up certain points. Not the important ones of whether the firm really is solvent, whether it is dealing in unauthorised investments or anything else of real import.

    The most fatuous example in my case was in one year I received an e-mail telling me that my PII was non-compliant. I rang up to find out why as I was genuinely surprised as I had always stipulated to the insurer that my policy had to be fully compliant with the regulators requirements.

    It turns out that the cover was about £1,500 pounds short of that required. This was because I paid my account some 6 weeks before the accounting date and in the interim the exchange rate had moved against me. The insurer upped the insured amount (which is stated in Euros and then converted) FOC.

    The following and subsequent years I arranged payment in Euros. Gabriel asks for the premium cost in Sterling. So on the first occasion I rang up and asked what exchange rate they preferred so I could insert the sterling amount. Thereafter I used the exchange rate applicable on the accounting date.

    To me this shows the old adage “The computer says…” No human input or any vestige of intelligence used.

  3. Press a button on your back office system, amend things as appropriate and then complete Gabriel. It should take 30 mins max! I agree that the FCA should use that data better, but as for the actual submission, if you don’t have a suitable back office system then talk to me!

  4. Giving my opinion in the context as a business owner, with all the reporting, regulatory, & compliance I have to do, coupled with the day to day general housekeeping its all to much, I find now its all to time consuming, complicated and expensive, now the elephant in the room is do I rush this, do I take the simplistic approach and just put any old figures in, do I just side step some in the vain hope I don’t get caught ?

    We have been in a situation that we have been pushed way passed what may be considered proportionate and fair, to a place of real burden.

    And the one has to ask, has this resulted in better consumer outcomes, and a better consumer experience ? or has it just been a total waste of time and resource ?

    I sit at my desk every day and there is at least an hour (usually a lot more) of regulatory, compliance or reporting to do, of one description or another……… King Canute ! I fear may have more success than I….

    A holiday was something to look forward too and enjoy, now it fills me with utter dread knowing that sat on the beach for 14 days will cost me on average an extra 2 hours a day when I get back home, and back at my desk, catching up on what I can only term as crap.

    Hahaha I have just thought, my only light relief is vent my frustration on this tread, so credit where credit is due, thank you MM for providing an outlet for a man that might otherwise be a drooling mess banging his head against the brick wall that is the F.C.A !!! A half hour holiday for the mind; that is sad !

  5. 30 mins is a bit optimistic Ken but yes should take no more than a couple of hours to collate the info and complete the return…if you have a good back office system in place that is.

  6. I suspect that the humans at the FCA look at a firms historic data if they are alerted to a problem and are preparing to visit. The data submitted should be as accurate as possible after all and discrepancies, or outright lies, provide a basis for supervision if all else fails….

    To me though the purpose of Gabriel is to make us stop, step back, take stock and really understand what is going on within our business in detail and at a point in time that can be compared to another. Day to day business sometimes means that incremental changes (good and bad) aren’t noticed – this is one way they might be.

    • Whilst I see your point Pauline, there are much better ways of analyzing the data that via Gabriel for us as a firm. Just as annual accounts are a snapshot, Gabriel is a 6 monthly snapshot, but is presented in a less user friendly way. Our back office system gives us much better MI data and our banking system when linked to Sage gives us a better picture there too, so if the FCA are not using the data they gather from us properly, then reformatting info we already have to transfer to the FCA is not good use of our time.

  7. I have to agree with Ken. Although it didn’t take me 30 mins, I certainly could complete my returns in just over an hour. It was just a matter of setting up a spreadsheet that took the required info from the management accounts.

    I also agree that the returns can be manipulated by the unscrupulous.

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