Regulation  

FCA issues guidance on ‘nightmare’ RMAR

The Financial Conduct Authority has issued guidance that it says is designed to help advisers navigate Section K of their retail mediation activities returns following outcry from the industry.

At the beginning of this year, the then-regulator Financial Services Authority drew adviser ire when it introduced a section in adviser RMARs requiring firms to provide data on payment methods.

One critic branded the section unworkable, saying it was “fundamentally flawed” and presented a huge additional workload for already-strained advisers.

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Other critics dubbed it a “nightmare” to comply with owing to demands for information many advisers did not have to hand, and requiring them to ask providers to separate pre-Retail Distribution Review commission with post-RDR adviser charging.

Other requirements meant it would be impossible for some advisers to complete if for example they had invoices outstanding at the end of an investment period or when some payment methods were unknown.

At the time the FSA said it had no plans to change its requirements.

Later (30 May), the Association of Professional Financial Advisers estimated complying with RMAR occupied three days’ worth of adviser time and therefore cost the industry £10m every year.

Now, the regulator has issued guidance meant to clarify its terminology and guide advisers through the RMAR process.

Among other points, the guidance clarifies:

• that independent advisers do not have to fill out all of section K, as columns D-F relates only to restricted advisers;

• where advisers have to cite provider and platform facilitation in columns B,C, E and F, explaining for example that any product invested through a platform goes down under the latter and that DFMs are regarded for the purposes of the form as the same;

• adviser revenue from charges taken in the form of regular instalments should only include the amount due within the reporting period;

• where an adviser offsets the client charge with trail commission from pre-RDR products, the adviser should report the total adviser charge agreed and not subtract the offset amount;

• although the adviser must report the number of clients paying for ongoing advice, clients with pre-RDR contracts where any ongoing advice is paid for by commission should be excluded; and

• where an advice firm levies a variety of charges for different levels of service, the least possible charge should be reported as the minimum and the highest possible as the maximum. The FCA said these can be reported as percentages.

A spokesperson for the regulator said: “We’ve been listening carefully to the concerns firms have about reporting. We are providing a short term solution that will help them report data to us, and - longer term - are planning to consult on making this into formal Handbook guidance so all the information on reporting is in one place.

“We have worked closely with representatives from the industry to ensure this solution provides the assistance firms need.”