FCA gives in on RMAR demands after adviser outcry

The Financial Conduct Authority has proposed significant changes to the form used by advisers to report back to the regulator after adviser complaints over the past year that changes under the Retail Distribution Review had made reporting more complex and time consuming.

The changes being consulted on today (7 March) follow guidance published in November 2013, which gave firms additional information on how to navigate Section K of their retail mediation activities returns following outcry from the industry.

Under the proposals, among other changes advisers would move to reporting on an annual basis rather than six-monthly, and will be able to submit data on a cash or accruals basis in order to bring regulatory reporting in line with their own accounting.

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In a separate effort to simplify reporting, the annual questionnaire completed by authorised professional firms will also be brought into the regulator’s Gabriel system to allow online submission and the number of questions will be reduced by around 75 per cent.

To read all of the changes, see the consultation paper here.

The changes to section K come alongside a proposal to retire section L of the form, relating to consultancy charging on pensions that were banned last year.

Section K of the RMAR was introduced alongside the introduction of the Retail Distribution Review in January 2013 in order to gather information on payment methods used by authorised firms.

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

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-RDR 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.

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.

Chris Hannant, director general at APFA, said: “We are pleased that the FCA has published this consultation, which should simplify RMAR reporting and reduce the administration burden on advisers.

“This consultation is a welcome sign that the FCA is taking a different approach to its predecessor. In particular, it is positive to see the regulator is considering making submissions annual, improving the field labels, tailoring the layout and format and adding automatic totals.

“We have been pushing for a number of these changes to be made, and look forward to responding to the consultation fully in due course.”