The Retail Mediation Activities Return (RMAR) is the core regulatory return submitted by firms which provide intermediary services arranging and/or advising on the following retail products – mortgages, non-investment insurance or investment products. Firms are required to report at least twice yearly for most sections of the return, based on their Accounting Reference Date (ARD), with 30 working days in which to submit the return.
Firms that complete the RMAR
We require the following firms to complete the sections of the RMAR relevant to the activities they undertake:
- firms with permission to carry out insurance distribution activity in relation to non-investment insurance* contracts (eg general insurance broker)
- firms with permission to carry out home finance mediation activity (eg mortgage broker)
- personal investment firms and other investment firms that have retail customers and carry out certain activities in relation to them, such as advising on investments (eg financial adviser or wealth manager)
Many firms carry out business falling into more than one of the above categories. Some firms carry out regulated business as a secondary activity to their core non-regulated business (for example, a retailer which also offers the customer insurance cover for the product it sells).
Typically, up to around 12,000 firms complete at least one element of the RMAR, ranging from sole traders up to large broker companies and adviser networks.
*Non-investment insurance is a contract of insurance which is a general insurance contract or a pure protection contract but which is not a long-term care insurance contract.
Type of data the RMAR contains
The RMAR has 11 sections, covering different aspects of a firm’s business. This includes financials (Balance sheet, Profit and Loss account, Client Money and Capital resources) as well as other information such as threshold conditions, conduct of business, training and competence and retail investment adviser charges.
Not all firms complete all sections of the return as this will depend on the type of business that they do. For example, banks, building societies and investment firms may complete sections on conduct of business, but do not complete the financial sections as they have their own financial returns. Therefore, the total population of firms reporting varies from section to section.
Basis of the data used in our analysis
We include data from selected sections of the RMAR – Section B (Profit and Loss account), Section D (regulatory capital), Section E (professional indemnity insurance) and Section G (conduct of business) – to provide information on the nature of the business undertaken by and the financial performance of firms who submit the RMAR. We also include data from Section K, which provides specific information about retail investment advice.
The underlying data for the tables and graphs in our analysis is provided in Excel tables. In some cases, there is additional data in the tables not shown in our main analysis.
Generally, the data reflect the latest return submitted in the relevant calendar year (ie 2022) by firms that were on the register as at the end of the year (ie 31 December 2022). This analysis is based on RMAR data as submitted by firms. We have carried out some limited cleansing of the data.
Revenue, profits and adviser staff data (source: RMA-B and RMA-G)
For the Profit and Loss account (RMA-B), we use reported data for the full financial year of account ending within the calendar year for firms that were on the FCA register as at 31 December 2022.
Revenue is broken down into the 3 types of regulated business – mediation of retail investments, mortgage and non-investment insurance. In addition to these activities, firms may generate income from other types of regulated business (such as consumer credit). Firms are not required to report this in any detail on the RMAR so references to regulated income in the analysis include only the 3 main named sources.
Firms also report earnings from non-regulated business activities in the RMAR. The reporting population includes firms for whom regulated financial business is not their primary activity (such as retail businesses that also offer insurance cover or estate agents that broker mortgages products). For this reason, the analysis only includes profit related data for financial adviser firms as the profit figures for the other firm types are distorted by non-regulated business revenue.
Data that combines financial data with adviser numbers reflect only firms that have relevant financial data on RMA-B and adviser staff on RMA-G.
Capital requirement and surplus data (source: RMA-D)
We require intermediary firms to hold a minimum amount of capital. This is to make sure they have sufficient resources to absorb routine losses or redress claims against them and can make appropriate arrangements for an orderly wind-down if they leave the market. Having less than the required funds is a breach of FCA rules and we require firms to take immediate steps to rectify any shortfall.
The exact requirement for each firm depends on the nature and size of its business. There are separate requirements for home finance/non-investment insurance mediation activities and for retail investment activities. In each case, the core requirement is calculated as the higher of a minimum base requirement and a percentage of relevant annual income. Additional requirements may also apply.
The minimum base capital required to be held for home finance/ insurance activities is £5,000 for firms not holding client money and £10,000 for firms holding client money (and operating a statutory trust). The minimum capital to be held for retail investment activities carried on by a personal investment firm is £20,000. For this analysis, where a firm has both requirements, the data reflect the highest capital requirement and lowest surplus for the firm.
Professional indemnity insurance data (source: RMA-E)
Professional indemnity insurance (PII) is liability insurance that covers firms when a third party claims to have suffered a loss, usually due to professional negligence. We require certain firms to hold PII cover to make sure that they have the means to pay negligence and other claims and to help prevent insolvencies leading to excessive claims on the Financial Services Compensation Scheme (FSCS), which is funded by trading firms. Relevant intermediary firms that are not exempt or do not hold a comparable guarantee are required to provide details of their PII cover on Section E of the RMAR following each renewal of cover.
Retail investment advice and charges data (source RMA-K)
This section provides information on investment advice and related charges where a firm provides a personal recommendation to a retail client on a retail investment product.
Firms can provide advice either on an independent or restricted basis. To be considered independent, a firm’s recommendations to clients must be based on a comprehensive and fair analysis of the market and be unbiased and unrestricted. A firm provides restricted advice if it makes recommendations which do not constitute independent advice or if it provides basic advice only.
The data in this section reflect all firms that complete Section K of the RMAR, whether or not the provision of advice on retail investment products is their main activity. The population of firms differs from those reporting on RMA-B so data (eg revenue) are not directly comparable between the 2 sections. The underlying data tables published alongside this bulletin contain the detailed data for this section, and the equivalent data just for firms with the firm category of ‘financial adviser’.