The FCA Financial Resilience team has clarified the intention behind the data requested in their survey in relation to Question 2b.
Question 2b, Please provide how much of your cash inflows advised in 2, is ‘contractually committed’.
The online FAQ, gives the guidance …
“We want to identify how much of your estimated cash inflow figure relates to sales that have already been made and/or are contractually committed. For example, this should take into account payment you expect to receive for services you are already contracted to provide, where payment is due within the period. The would include, for example, income anticipated from existing customer for service charges/fess or other income due within the period such as interest payments. This should not include additional sales from existing customers or new sales.”
It has been pointed out to the FCA that brokers could only class new business and renewals that have been confirmed in this section, and the figure entered will therefore depend on when the broker answered the survey, as to what they could report up to that day. The FCA seemed ‘surprised’ that most brokers only worked 4/6 weeks ahead on renewals and would have little other committed inflows to report. It was explained that forecasting for brokers is much harder than historical data.
As a result, the FCA has agreed to amend the guidance they give for the next survey, and may even amend the timelines given for GI brokers, to make the data more relevant (i.e. At a given date, how much…etc). Firms should raise this point with the FCA in the event that they receive post survey follow-up contact based on this data.
It is not deemed necessary at this stage for a firm to resubmit their data even if they completed the survey as soon as it was received, or if they based the contracted income figure on their ‘un-earned commission’ included in the end of March CMC, meaning their forecast inflows would be considerably less than if they had waited until the deadline date of the survey and had received April and part of May renewal instructions.