General information

March 2008

This page is for managers and owners of small firms. It contains action you should take to ensure your firm is submitting accurate information to the FSA in its Retail Mediation Activities Return (RMAR).

We recently finished a project to assess whether the returns small firms send to us are accurate. We asked 200 small firms selling mortgages, investments and insurance to verify the information in their returns.

We selected the firms who claimed exemption from either the capital resources requirement or professional indemnity insurance (or both) in their RMARs. In our experience, many firms do this mistakenly as few firms are actually free from the requirements, and so it is a sign of potentially wider issues.

Below we set out what we found and include an action list for your firm.

Problems we found

  • Too many firms were unable to verify the entries on their RMAR to an acceptable standard. Half of the firms reviewed did not provide accurate and up-to-date financial information, or could not prove the information in their regulatory returns was accurate.
  • Senior management too often delegated their responsibilities for ensuring the accuracy of the RMAR to staff with a poor understanding of the requirements and who were not competent to complete it.
  • Common problems we found were firms using old accounts, using the same set of accounts for more than one reporting period, and using rounded figures and estimated values.
  • We also found several firms who gave us potentially misleading information. When challenged to provide proof of the information they submitted, 15 firms asked us to withdraw their FSA authorisation.
  • Several firms have also been referred to our enforcement team. Enforcement action can result in a fine or a firm losing its FSA authorisation.

Action list

  1. Take responsibility for the RMAR. Senior management and owners of firms have overall responsibility for the accuracy of the RMAR, even if they delegate its completion to others.

  2. When delegating responsibility for completion of the RMAR, ensure the person has enough understanding of what is needed and is competent to complete it accurately.

  3. Ensure you keep a copy of all documentation used to support the entries on your RMAR submissions as you may be asked to verify what you have included.

  4. Take advantage of the help available from the FSA rather than estimating or guessing your answers. In the first instance, use the help boxes within the RMAR and the assistance on our website. Our contact centre is open during office hours and happy to help if you get stuck. You can call them on 0845 606 9966.

We take the quality and integrity of the RMAR very seriously. It is one of the most important tools we have to help us regulate firms. It is vital that we receive timely and accurate returns and we will take action against those who persistently submit inaccurate returns. This can begin with a firm being placed on our Watchlist, which will bring closer supervision including more regular contact from us and unprompted visits, but it could also lead to enforcement action.