Firms must begin collecting data for the Retail Mediation Activities Return (RMAR) from April next year and the first submission to the regulator will take place from 1 July 2005 onwards, depending on the firm’s accounting reference date. Small firms (those with an income of £60k pa or less) are excluded from the requirement to report mid-year financial information for the first year.
After this period small firms must report on a six-monthly basis.
“Even though firms have until April before they have to start collecting information, they should ensure their systems are changed now to deal with these requirements,” said Chris Cummings, director of AMI.
“Firms need to find out what information they need to collect, what systems they need to have in place and how they will submit the information to the FSA.”
The methods available to firms for submission of information have been narrowed with the FSA’s announcement that its system-to-system option will not be available from July 2005 as previously stated.
The only option available next year will be through web-based forms currently under development.
The FSA has stressed it is taking a phased-approach to regulatory reporting beginning in 2005. Robin Gordon-Walker, spokesperson for the FSA, stressed the regulator was working with ‘the grain of the industry’.
“The initial date for the system-to-system method didn’t have much give in it,” he said. “Not all firms would have been in a position to operate it and we want to wait until firms are in a positiion to use it. We will advise on a date when it is ready.”
Nick Berry, channel manager – mortgages at 1st Software Berry was not convinced: “The FSA use the term phased-approach to reporting but this just seems a good get-out clause for when you can’t do something.
“My belief is that, for something like the system-to-system process of reporting, the FSA are not technically ready.”
He added: “If this approach had been made available it would have made intermediaries’ lives a lot easier. For one, the onus would have been on the system providers, now the onus is fully on the intermediary firms with the web-based submission.”
Cummings believes the FSA should reconsider the £60k income level exemption for reporting. There is a widespread feeling, voiced by delegates at Mortgage Business Expo, that this has been set too low.
“AMI initially suggested an income of £250k pa,” he said. “This would have covered most of the industry and would have given the FSA a much more phased-approach to reporting.”
With only a £60k income level, Cummings is concerned that the FSA are asking firms for information it will not use or work on. “The information it receives next year will be the benchmark for all of the industry,” he said.
“The FSA have to be able to collect, analyse and then feedback that information to the industry so we can use it. There is no point asking for data which doesn’t get back to the industry.”
Gordon-Walker was clear on the importance of the information collected. “This is vitally important information for our supervisory judgements,” he said.
“We can learn and deduce things from this information. Data capture is our main way of picking up issues. It will all be looked at and processed and will not go into an electronic black hole.”
Cummings was adamant that the FSA’s structure for regulatory reporting was the correct way to submit information but it is ‘important this is done well and done right’.
“If this system of reporting works well there will be major benefits for intermediary firms – it will be easier and cheaper for a start,” he said.
Berry advised firms to do their research. “They need to look at the documentation to see what information they require,” he said.
“Also look at the FSA’s website which has a very useful Q&A section. They should also contact their system providers to see what they’re doing to help firms report to the regulator.”
Concerns have also been raised about the Product Sales Data (PSD) submissions which the FSA will begin collecting from all product providers next September.
Lenders must begin collecting this data from April 2005.
Speaking at the Mortgage Business Expo 2004 Nigel Smith, director of market propositions at Focus Business Solutions, said: “Product manufacturers have an obligation to send data to the FSA case-by-case on the business brokers have put through,” he said.
“A number of organisations haven’t kicked off projects to gather this information yet and the collation process (audit and archive) for lenders is a massive task.”
“AMI is concerned about the robustness of lenders’ IT systems,” said Cummings. “If lenders get it wrong then this will affect intermediary firms’ risk rating at the FSA.”
Information required from firms in the RMAR report
Balance sheet.
Profit and loss.
Client money.
Financial resources.
PII self-certification.
Threshold conditions.
Training & Competence.
COB data.
Supplementary PSD
Data for fees.
Firms will also be required to submit separate compliants returns.
Source: AMI
Technology required
The FSA’s system is based on the language XML. Generally speaking, this would suggest firms with the following and higher will face few problems with e-reporting: IBM-compatible PC, Pentium III processor (500MHz+), and 256Mb RAM. It is likely that Adobe Acrobat 5.0 (available for free) and Internet Explorer v5.5 plus will be required.
