An adviser has complained to the Financial Conduct Authority (FCA) following an hour-long phone conversation about Retail Mediation Activities Return (RMAR) reporting that led to an agreement over accounting rules that was not "entirely logical".
Facts & Figures Financial Planners managing director Simon Webster phoned the FCA to discuss new accounting rules which demand adviser charges are accounted for on an accruals basis.
He argued that reporting revenue as soon as an invoice is issued irrespective of whether cash was received, was difficult as his firm's systems were geared towards accounting for income after it was received.
The regulator told him that he needed to report his adviser charges on an accruals basis and everything else on a cash basis but Webster argued the agreement would make his RMAR report misleading.
In his letter he wrote: "I have just spent an hour on the phone with the FCA contact centre and I am not sure that the position agreed at the end of that hour is entirely logical.
"I agreed with the contact centre that we would report adviser charge on an accruals basis and everything else on a cash basis even though that makes our RMAR B inconsistent and potentially misleading."
Webster explained that his regulated business revenue and other income would not equate to the total revenue, which was based on management profit and loss reporting, based on cash accounting.
"By definition the numbers have to be wrong", he said.
The FCA changed the way it wants firms to report their RMARs in December last year when it introduced accruals-based accounting to "make reporting for firms more straightforward and less time consuming" following a consultation.
But Webster argued that the decision actually made it more difficult for small and medium-sized firms to file their RMARs twice a year.
He wrote in his letter: "The fact is that for those firms such as ours, that have always accounted on a cash basis, this 'concession' actually makes things infinitely more complicated and expensive.
"I estimate this change would add an unnecessary £2,000 per annum to our accounting costs alone - for zero reporting or regulatory benefit."
RMAR guidelines have recently come under fire from the industry as the regulator overhauled some of the sections, requiring firms to send additional information on initial and ongoing advice charges, for both independent and restricted advice.
In a paper out yesterday, the FCA said it would work on how it communicates with firms about future data collection efforts, and that it would test its new data strategy on the retail investment space.
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