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The FSA today published its new data reporting rules for Retail Mediation Activities Return (RMAR) forms. Here is IFAonline's breakdown of the changes you need to know.
Today's rules are part of the regulator's plans to extend the transactional data it receives via product sales data by collecting extra information from firms via the twice-yearly RMAR forms.
Following a consultation in May, here are the new reporting requirements:
-Firms will need to record the charging structures in the original proposals (per hour and percentage of investment) and also structures where charges are based on a fixed fee or a combined adviser charging structure.
-The FSA will still require firms to indicate which charging structure is typically offered for both initial and ongoing advice charges.
-Adviser charging revenue reporting is to be based on standard UK Generally Accepted Accounting Principles (GAAP).
- All data in Section K, apart from data on adviser charging structures, should be reported on a cumulative basis - no change.
-In a change from consultation paper 11/8, firms are expected to report adviser charges on an accrual basis in the reporting period, and not actual payments received in the reporting period. The FSA said this will make reporting less time consuming.
-Initial adviser charge payments to be reported on an accrual basis in an amendment to the section. If an initial charge is not paid in full it must be recorded under row 5 of Section K as ‘Regular instalments as proportion of the total due'.
-Adviser Charging revenue should be reported inclusive of VAT levied on the retail client - in line with standard accounting principles.
-Section K amended to include the number of one-off advice services.
-If the client agrees to pay for ongoing advice, e.g. an annual review,
and there is a separate charge for ad hoc advice in addition to that service, the firm should record the additional charge under the heading of one-off advice.
-In line with the consultation paper, minor amendments have been made to the rules so revenue reported under rows 1, 2 and 3 of the section should be split between three types of service:
Initial services - the revenue during the reporting period for services provided at the outset of the GPP, for example advice to the employer on setting up the scheme and launching it to employees.
Ongoing services - the revenue during the reporting period for ongoing services, for example, for helping the employer with the annual scheme renewal
One-off services - the revenue during the reporting period for services not
included as initial or ongoing services, for example, one-off advice to an
employer about using an existing GPP to meet auto-enrolment requirements.
Where particular GPP business includes both adviser and consultancy charges, these should be reported separately under Sections K and L respectively.
Where the employer has pre-arranged advice for his employees paid
for within overall consultancy charges, this should be reported under section L.
Where a GPP member has arranged separate individual personal advice, any adviser charge for that advice should be reported under Section K.
- Section amended so consultancy charges and fees can be recorded in the headline figures to avoid skewing profit and loss data.
-For firms operating within more than one type of advice - for example offering both a restricted multi-tie and a restricted-limited type of advice service - it should tick both boxes in Section G relevant to these advice description.
Transitional rules
The regulator has amended its transitional rules for implementing data collection:
-Firms must now submit their first report for the new data requirements (Sections K and L) at their first full reporting date after the date of implementation of the new rules - i.e. the first full reporting period after 31 December 2012.
The FSA said this will avoid confusion on what data firms should report and when.
Initial and ongoing advice
FSA has amended the definitions for initial and ongoing advice in the RMAR guidance so they are more closely aligned with COBS rules:
-Adviser charges received on behalf of clients from third parties such as parents or trusts should be recorded as being from the client.
-In relation to pre-RDR business, firms should continue to report commissions within section B of the RMAR - both new commission relating to execution-only business and trail commission relating to products purchased pre-RDR.
-Section K records the number of retail clients who have agreed to pay an adviser charge for an ongoing advice service in the reporting period. It does not record charges for services which are not related to the provision of a personal recommendation.
-Firms should report all adviser charges after the RMAR data requirements come into force, irrespective of whether the adviser charge relates to advice on new business or new advice on products purchased pre-RDR.
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Software
As the last person pointed out, what systems do the FSA expect us to use for this reporting without hours of extra work and additional systems or excel spreadsheets? I use Sage Professional in answer to the last person which did the job really well and can be shared on a server so all users can input the information as each case progresses but even that will not cope with the additional new expectations.
Posted by: Judith Farrall
Reporting inclusive of VAT in line with standard accounting principles
I thought that most accounting was done exclusive of VAT; my accounts make no reference to VAT as 'income'. So our FSA fees from now on are going to include the VAT we pay away to HMRC? Hardly being fair is it? Richard, your monthly earnings report is probably what you measure your consultants performance against ie paid cash. Unfortunately it looks like they are not going to allow you to use this in your RMAR, perhaps because it is too easy (and does not include the VAT element). Surely it should not matter whether a cash basis of accruals basis is used as long as it is the same each year. The FSA must try to remember that not all firms have large accounts departments and supernumerary staff to pull together any figure they wish us to provide. I do agree with Richard that much of the mid year Gabriel return is an expensive waste of our time. Whilst I understand that they would wish to have data on complaints and capital adequacy, but is sales data really that important and what do they do with it?
Posted by: Tony Capener
Software to assist with Gabriel
We use Durell as a back office system which integrates the accounts and as a result I can obtain most of the info quickly using the reports we have developed specifically for the completion of the Gabriel form.
Posted by: Sally Mynett
Standard Accounting Practices
Reporting inclusive of VAT in line with standard accounting principles – what?? This is insane. Every GABRIEL Return and set of annual accounts we have ever done is apparently wrong! Clearly we must change our accountants. So the Government increase VAT by 5%. Do our future fees and levies go up given the latest consultations being made? VAT is an HMRC charge. It has nothing to do with the FSA and the only reason I can think that the FSA may want this information is to look at the effect of the introduction of VAT on consumers post RDR. Yet in spite of our concerns about the effect of VAT on consumer bills being fed back to the FSA, they ignored them in their cost / benefit analysis. That analysis looks seriously flawed now. Sage cannot handle VAT in the manner the FSA require nor can any back office system that I am aware of. To provide the figures the FSA wants is time consuming, inconvenient and at odds with known accounting practices. We are effectively being asked to keep two sets of accounts and audit trails as to why the two may differ. But what really rankles with me, is that we have gone to great lengths to feed back our concerns to the FSA, to express our views via AIFA and the FSA has effectively said up yours and by the way we want more information not included in the original CP. I can see another letter to our MP who is also a member of the (impotent) TSC.
Posted by: Sam Caunt
Oh Really!
Yet again the numpties in the Canary cage thing we are all Plcs. The smaller firm will (if they have any sense) just look at the overall and then make up the divisions as they go along by making an educated guess based on an overview. Just so long as it balances with the total remuneration is the FSA really going to come along and analyse every piece of business to ensure the breakdown is accurate? Even if the figures were presented pin accurate what would these jobsworths do with them? They don’t even use the information they have at present. Just ask them how many IFAs there are, the age groups, the qualifications or any other detail. They have the information, but they can’t retrieve it. All this extra burden they place on us makes them look as if they are doing their job, makes them look important and at the end of the day will be pretty valueless anyway. Meanwhile those with less imagination will probably be filling half their time providing these details.
Posted by: Felix Godwyn
GABRIEL Return
Our return is due this month and so I have asked the FSA as a matter of urgency how they would like my data provided this month so that I can comply with their understanding on standard accountancy practice i.e. with VAT included or not. What this all means and how useful it all is to the FSA when some firms are registered for VAT and some are not is beyond me. Then of course some adviser charges taken from the product will pay for VAT and others won’t so in one sense I can understand why the FSA want the inclusive figure. But please do not use standard accounting practice terminology as an excuse. Which Numpty fed this back to the FSA via their CP?
Posted by: Sam Caunt
Quiet Observation
During WW2,when people were forced out of their homes and into a ghetto, they were each made to fill in forms listing and describing every item they owned down to the humblest of objects. These lists were then cross referenced against what other members of the same household had listed and the consequence for anyone suspected of leaving something off the list which should have been included was dire.
Posted by: Historian
Hier herrscht ordnung
@Historian Ah, quite so. But this was the Germans administering the system. Then as now legendary for detail and efficiency. Just like our own dear FSA.
Posted by: Harry Katz
Type Error
I have been told that there is an error in PS11/13. Figures are net of VAT (not inclusive of VAT) so that is OK then. How did such a mistake get paid in such an important Statement?
Posted by: Sam Caunt
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Breakdown? Interesting choice of words..
I've often wondered what the FSA does with the information provided by ourselves in our 6 monthly GABRIEL return. It seems this reporting exercise is getting out of hand. I would much rather the FSA chase the riskier practices as identified by whistleblowers, but they seem reluctant to act on information given, and would rather interpret figures which could so easily be input incorrectly or with intent. I loathe our 6 monthly gabriel return, and it looks it is now going to get alot more difficult. Has anyone out there successfully run a bac-office system which aids the Gabriel return? We currently do all of the calculations manually from our monthly earnings report summary. Any ideas would be most welcome....
Posted by: Richard Williams