Avoiding RMAR submission errors for compliance

Submitting your Retail Mediation Activities Returns (RMAR) accurately is a key element of every insurance intermediary’s ongoing FCA compliance. The regulator routinely screens RMAR information in its data warehouse to analyse and spot trends within individual firms and across the market as a whole. It is therefore important to ensure your returns are correct to safeguard your firm from regulatory scrutiny. Andy Brown explains how you can avoid the most common pitfalls.

Getting a Retail Mediation Activities Returns (RMAR) submission wrong can have serious implications for a firm. Unintentional mistakes can raise questions about governance and overall compliance, with even an innocuous error potentially triggering closer supervisory attention from the FCA. Any regulatory intervention runs the risk of reputational damage, harming trust and relationships and impacting your firm’s standing in the market.

In addition, RMAR errors and the process to rectify these can create additional work for compliance teams, diverting resources away from core operations. At the very least, errors identified by the FCA may prompt requests for additional evidence to satisfy the regulator that your firm remains compliant.

Common RMAR errors

Based on our experience, there are a number of common errors made by firms in completing their RMARs, any one of which can lead to scrutiny by the FCA and potential reputational damage.

The incorrect calculation of fees entered in RMA-J is the area where firms consistently get it wrong. Where RMAR data is used to calculate a firm’s annual regulatory fees, errors in reported regulated revenue, can lead to under/over payment of fees on RMA-J, potentially costing your firm hard earned cash.

Report	Common errors	Consequences
RMA-A	Insurance assets Insurance/client assets, being amounts due from clients, client money bank accounts and amounts due to insurers, which should all balance down to £Nil should be excluded from RMA-A on the assumption that they do not belong to the firm. Intangible assets Firms reporting intangible assets should deduct these amounts when calculating their total capital resources in RMA-D. These cannot be realised instantaneously so cannot be included as part of a firm’s capital resource.	You may appear to meet/exceed regulatory capital requirements. Overstating assets can conceal potential capital shortfalls appearing compliant when the firm is actually under-capitalised. Where this is the case, misstated capital resources, (particularly that of a deficit) must be remediated and the FCA notified immediately with information on your remediation plan. At its core, inaccuracies of this nature undermine confidence in your solvency position leading to intensified scrutiny, supervision and reputational damage.
RMA-D	In calculating the firm’s capital resources, interim profits should only be included if verified by the firm’s external auditor. Interim profits that have not been externally verified should be excluded, unless the firm is eligible for audit exemption under the Companies Act 2006.
RMA-B	Appointed representatives (ARs) ARs are not FCA authorised entities so are not required to separately report their results to the FCA under RMAR. Instead, as they remain the responsibility of the principal authorised firm, the income from the AR should be included in the authorised firm’s RMA-B1 Regulated Business Revenue. Additionally, and in order to ensure that the figures reported in RMA-B agree to the underlying statutory or management accounts, there is an equal and opposite adjustment to the firm’s expenses figure to agree to the underlying results. For the purposes of calculating the ‘annual income’ as part of a firm’s capital requirement on RMA-D, it is only the regulated business revenue that is taken into account, not all reported revenue. These amounts should also include AR regulated income.	Failure to correctly include AR income can lead to an understatement of regulated revenue, resulting in an under-calculation of the firm’s capital requirement. This exposes the firm to non-compliance with capital adequacy rules. Additionally, discrepancies between reported income may trigger FCA queries and potentially lead to supervisory intervention.
RMA-D	Subordinated loans A subordinated loan can be included as part of a firm’s capital resources if it meets the detailed requirements set out in MIPRU 4.4.7 and 4.4.8. These include, but are not limited to: – a maturity date of 2 years (or 2 years notice of repayment if it does not have a fixed term). – the subordinated loan agreement is set out in writing and has been prepared using the FCA standard template; and – the amount of subordinated loan in the capital resource calculation cannot exceed four times net assets of the firm (and whereby net assets excludes redeemable preference shares and intangible assets – but not goodwill up to 14 January 2008). This restriction does not apply where no client money is held.	Inclusion of subordinated loans that do not meet FCA criteria can artificially inflate a firm’s capital resources, giving a false impression of solvency. This misrepresentation may result in regulatory breaches and require immediate correction. The FCA may demand removal of the non-qualifying capital and reassessment of the firm’s financial position, potentially triggering capital shortfall notifications and remediation plans.
RMA-D	A firm’s capital requirement is set at the higher of the base requirement and: – 5% of annual income (for firms that hold client money) or; – 2.5% of annual income (for firms that do not hold client money) It should be noted that ‘holding client money’ refers to having a ‘client money permission’, irrespective of whether client money is actually held or not.	Misinterpretation of the definition of ‘holding client money’ can lead to underestimating the firm’s capital requirement. Firms with ‘permissions’ that do not account for the higher percentage may fall below required capital thresholds, risking non-compliance. This can prompt FCA scrutiny and reputational damage, especially if the firm is perceived to be operating with insufficient financial safeguards.
RMA-J	Calculation of incorrect income figures by the firm in respect of the FCA, the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS). Firms are supposed to provide ‘annual’ figures for the fees calculation in respect of the below: FCA – Annual income A firm needs to calculate the ‘annual regulated income’ and where the firm has an AR, the ‘annual income’ of the AR should be included and calculated on the same basis as the firm. Any commission sharing arrangement between the firm and the AR must be identified and excluded from the calculation to avoid duplication of the same income. FOS – Relevant annual income ‘Relevant annual income’ should include only income received from ‘consumers’. The rules were changing from 1 April 2025 to include income from commercial eligible complainants (this previously only included personal complaints). The FCA has now extended the consultation to 1 April 2026. FSCS – Annual eligible income ‘Annual eligible income’ should include only commission and fees earned in respect of individuals, businesses with a turnover of under £1 million and ‘statutory insurance’ – i.e. compulsory classes of insurance only.	If you get this wrong, it can prove costly in that incorrect figures may result in a higher fees bill being levied on your firm (and it may then prove time consuming and difficult to correct with the FCA).

It is important to mitigate the potential risks of inaccurate RMARs, ensuring you embed clear ownership in your firm’s RMAR procedures, regularly review controls, and make sure that your team is sufficiently trained on RMAR requirements and guidance.

How we can help

Our team has considerable experience of helping insurance intermediaries prepare and submit their RMAR submissions and ensuring they have the appropriate training and robust procedures in place to ensure they do not fall foul of potential pitfalls as part of their submission process. We support firms in the following way:

End to end RMAR submission support

Ensuring full FCA compliance in collating and extracting the required financial RMA information to submit to the FCA on your behalf.

Optimised data capture and controls reviews

Improving information capture systems, ensuring smooth data collection for RMAR submissions, including internal process, controls and procedure reviews and health checks to minimise errors and regulatory risk.

Targeted RMAR training

Essential RMAR training tailored to FCA rules and SUP 16 Annex 18B guidance, helping internal teams stay up to date with regulatory changes and to avoid common pitfalls.

Direct regulatory insights

Through our bi-lateral meeting with the FCA, ensure our clients gain exclusive, benchmarked insights and best practices on all RMAR issues to keep firms compliant.

For more information or further support on RMAR submissions, reporting and training, contact our specialist team – Paul Goldwin and Andy Brown.