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Topics: Perspective Financial Group| RDR| FSA
Perspective Financial’s Julie Hepworth outlines how firms can satisfy a regulator growing hungrier and hungrier for firms' sales data...
Firms are about to see something of a sea change when it comes to the data they have to supply to the regulator on adviser and consultancy charging revenue, payment methods, client numbers and overall charging structures adopted by practices.
Introduction of the new rules with regard to RDR will necessitate a far more data-hungry FSA. To clarify exactly what it will expect of firms from 2013, it recently published consultation paper CP11/08: Data Collection.
Looking at the proposals, it will be obvious to many firms that their current methods and the systems they use to capture data currently may not be suitable to deliver the increased levels of data expected by the FSA.
At present, the FSA only asks firms for minimal data when it comes to the make-up of revenue. Firms aggregate all income from initial and ongoing services, and report it as either ‘commission’ or ‘fee’ income, split down into retail investments, non-investment insurance or regulated mortgage contract income.
The problem for the regulator when it comes to RDR and beyond is this only really provides macro detail and it will not be enough to create the accurate picture of a firm’s charging methods that will be needed by the FSA if it is to police the RDR effectively.
The consultation paper’s proposals seek to significantly alter the current status quo and will require firms to provide much more in the way of micro detail.
For example, from 1 January 2013 firms will be expected to split their revenue from adviser charges between: a) that received directly from retail clients; b) that received via product providers; and c) that received via platform service providers. And for each of the above payment mechanism categories, revenue must be split down between initial adviser charges and ongoing adviser charges.
Firms will also need to split the revenue for each payment mechanism into whether it was received for independent or restricted advice. Data will also be required in terms of splitting initial adviser charges between lump sum payments or regular instalments as a proportion of the total due.
The regulator will also want to see detail on the minimum and maximum charges applied and the method of charging used, plus advisers will need to report which is their most typical charging structure.
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Not much data available
As far as IFAs are concerned there will not be much data changing hands post RDR because there will be very few IFAs left in the market. Once commission goes, IFAs will quickly follow...
Posted by: Ken Durkin
More Data requirements
Do you think they will be asking for my inside leg measurement too? Quite frankly, by the time we have told the FSA all this info, we will not have time to earn any money, so the whole thing is self defeating
Posted by: Lee Tomkins
FSA Data
Over the years the amount of information required by the FSA and the PI insures ahas increased exponentially! Whist some is good MI and helps with TCF it isn't going to get any better! We have some software that produces all the data required by the FSA and your PI people. EMail me if you are interested.
Posted by: Ken Hayden
FSA Data
Would have been good to leave my email which is kenh@fmsnet.co.uk!
Posted by: Ken Hayden
Further wind up
Good old IFA online, just in case your considering staying in the job and getting on with whats required, lets speculate some more and wind IFA's up on a daily basis!
Posted by: mike
FSA data collection
Of course the FSA are going to control pricing. They are a bunch of self serving megalomaniacs so why wouldn't they? Will the consumer benefit? Of course not! so much for the Condems' promise of reducing bureaucracy & red tape. the FSA are clearly accountable to noone.
Posted by: richard
?
Having had a look and trying to make some sense of the "gobbledegooke" in the 69 page document. I still find it quite amazing that, if RDR is the champion of consumer protection how the hell is all this reporting going to be of benefit to them. As a small business such as mine the time, effort, cost and man power is more over the top than a gypsy wedding. Total waste !!
Posted by: DH
No clear guide lines
Adviser Charging and legacy product trail has still to be clarified. The fact that the FSA cannot give us an estimate as to when promised guidance will be given to those that have been adviser charging for years shows that the FSA do not understand adviser charging and how the information we give will be used. With no consistent guidance nor an understanding of what we do the data we supply will neither be consistent, accurate or repeatable. And we give advice - not sell product.
Posted by: Sam Caunt
Data
Surely the whole idea of RDR is to make it so difficult for IFA,s to stay in business so that their friends at the banks can have it all!
Posted by: Ian
Refusnik's Phil's attitude
Some have accussed me of being an RDR refusnik. And that is DESPITE the fact I already work on adviser charging, have incraesed my capital adequacy to the level required for 2013 and should finish my level 4 next week (I hope) BUT Having read the FSA paper on data collection (sometime ago), there is a reason which is advantagous to IFAs for the FSA asking for this information, so hopefully people will realise I am neitehr anti, nor pro RDR, I just try and look at the facts. The reason (I believe) why the FSA need these figures is so they can monitor vertically integrated firms (such as bancassurers and insurance cos with sales teams), to ensure there is no cross subsidy of the advice being provided through charges on the product. Without it, we will be put at an anti competetive position as IFAs. That's not to say that the FSA will actually do anything with the data, but that they will have the data, if they have the will to make a level playing field. As far discount brokers and execution only, that is something else the FSA will have to get to grips with and haven't as it should be factory gate plus a margin, not discounted and complicated products should not be sold without advice (but with the impression that advice is being given from very slick sales brochures), such as USP and SIPPs
Posted by: Phil Castle
The Human Condition
As many governments have found out to their chagrin it is markets that decide how gdp creates wealth, not politicians. The same goes for regulators. The average IFA does have enough intelligence to get from A to B in the most practical and economical way, to avoid many if not all hurdles that a regulator can put in its way. Hence the passporting in of EU IFAs under different legislation. Now it is the case of showing that the investment/pension specialist IFAs have an awful lot to do before they make some money for themselves. Which is why large swathes of our industry are moving to being protection specialists in that hugely under advised area, contracting the investment and pension work to others via new alliances they create amongst themselves. Commission is still payable. Indemnity terms are still available. Level 3 is still acceptable for those who miss the deadline for level 4. Profitability is the main parameter for businesses irrespective of what they have to advise on. Why advise on a hugely expensive investment and pension area when protection provides on a case by case basis far better levels of profitability? Why sell something for £100 that costs £80 to make, when for the same £100 you have the opportunity to sell something that costs £20 to make? I know what I will do.
Posted by: PJC
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Data
If, according to the FSA they do not intend to control fees post RDR, why do they need all this information, unless its just to keep people in jobs and expand their empire. The added cost to the IFA will be considerable. The FSA just have not grasped the idea that IFA,s do not have a botomless pit of money.
Posted by: terry