RMARs may be waste of time

Brokers may be wasting time and money completing their Retail Mediation Activities Returns because the Financial Services Authority is unable to fully use the information collected.

Michael Lord, head of the Financial Services Authority department responsible for supervising small mortgage firms, says common errors in the RMAR means it doesn’t have enough assurance about the quality of the data to use it fully.

He adds: “Common errors include firms saying they are exempt from professional indemnity insurance and capital rules, as well as getting their numbers wrong.”

One industry source says small firms hate the cost and man hours required to fill in the RMAR.

The source says: “Some firms can’t afford to take two weeks off from seeing clients so they just make it up.”

RMARs are submitted twice a year and cost firms around 500. They include information on fees, complaints data, training and competence.

Terry Pritchard, managing director of packager Chase UK, says: “It’s difficult for the FSA to get a proper picture of where small firms stand financially because their management accounts, which they base the RMAR on, won’t necessarily be up to date. Therefore, while a RMAR may be an honest account, it’s not a true reflection of the profit of a firm.”

John Malone, managing director of Premier Mortgage Service, says that when the FSA designed the RMAR it may have be-lieved that many directly authorised brokers would join networks. Since this has turned out not to be the case, he questions whether the regulator will have to revise the RMAR by using the information lenders collect on intermediaries.

However, Lord says the quality of the RMAR forms is improving as firms get to grips with them and the FSA is working with brokers to help them get it right.