RMA-D1 Regulatory capital

This help text does not form part of the FCA Handbook and it does not constitute individual or general FCA guidance.  The purpose of this help text is to help firms complete section [D] of the RMAR in SUP 16 Annex 18AR and to navigate to the guidance notes in SUP 16 Annex 18BG.  This summary is not a substitute for reading the actual text of the FCA Handbook.  It is important to note that this help text may be subject to periodic review.

1. Is the firm exempt from capital requirements?

This question should be left blank where it is not applicable. If this question is relevant to your firm, you should only answer 'yes' if your firm is exempt from capital requirements. Boxes should be left blank for mortgage and non-investment insurance, as there is no exemption from the capital requirements in relation to these activities.

Home finance and non-investment insurance intermediaries - MIPRU

2. Base requirement – Firms with the permission to hold client money should insert £10,000 in this field (£50,000 if client money is held on a non-statutory basis) in 2A, non-client money firms should insert £5,000 in (2B).

3 and 4. Annual income from mortgage and general insurance activities only

Client money firms should insert 5% of their total annual income from home finance and non-investment insurance activities only in (3A).
Non-client money firms should insert 2.5% of their total annual income from home finance and non-investment insurance activities only in (4B).

5. Capital requirement (higher of above) – If the base requirement is higher than the annual income % in questions 3 or 4 above, the capital requirement must be equal to the base requirement. Otherwise, the capital requirement must be equal to the annual income % in questions 3 or 4.

6. Other FCA capital resources requirements (if applicable) – We might from time to time impose additional capital requirements on individual firms. If this is the case for your firm, insert the additional amount in this field (please note that if your firm also does retail investment activities, you will need to insert this figure in (14A) as well).

7. Additional capital requirements for PII (if applicable) – Firms with a PII Policy excess of greater than £2,500 (or £5,000 if the firm has the permission to hold client money) are likely to have an additional capital requirement. If your firm is subject to an additional capital requirement for a high policy excess, you should insert the additional requirement in this field. Please see the RMA-E FAQs for guidance on how to calculate this figure.

8. Total capital resources requirement – This figure must be the sum of capital requirement in (5A or 5B) plus other FCA capital resources requirements in (6A) plus Additional capital resources requirements for PII in (7A).

9. Capital resources – This is the firm's total capital resources (please note that this figure must be calculated under 'Capital resources per MIPRU 4 (home finance and non-investment insurance intermediation)' and is the same as the 'capital resources' total entered in (32A) or (39A).

10. Capital resources excess/deficit – This figure is the capital excess or deficit. This is calculated by subtracting the amount of capital the firm is required to hold in (8A) from the amount of capital the firm currently holds in (9A). If this calculation produces a positive figure, the firm will be reporting a capital excess, however if it produces a negative figure, the firm will be reporting a capital deficit.

Personal investment firms (retail investment activities only) – IPRU (INV) 13

11. Category of personal investment firm – The firm inserts its firm category (either ‘B1’, ‘B2’ or ‘B3’ ) accordingly.

12. Capital resources requirement – The capital resources requirement should be calculated in accordance with IPRU-INV 13.13.2R to IPRU-INV 13.13.4G.

13. Additional capital requirements for PII (if applicable) – If the firm has an additional capital requirement for an increased PII excess or PII policy exclusions, this additional amount should be included in this box (please note that this must be the same figure as in question 6 of RMA-E.) Please see the RMA-E FAQs for guidance on how to calculate this figure.

14. Other FCA capital resources requirements (if applicable) – We might from time to time impose additional capital requirements on individual firms. If this is the case for your firm, insert the additional amount in this field (please note that if your firm also does home finance and/or non-investment insurance activities, you will need to insert this figure in (6A) as well). 

15. Total capital resources requirement – This figure must be the sum of own funds requirement (12A) + additional capital requirements for PII (if applicable) (13A) + other capital requirements (14A).

16. Capital resources – This must be the same as capital resource figure in (55A).

17. Surplus/deficit of capital resources – This figure is the capital excess or deficit. This is calculated by subtracting the amount of capital the firm is required to hold in (15A) from the amount of capital the firm currently holds in (16A). If this calculation produces a positive figure, the firm will be reporting a capital excess, however if it produces a negative figure, the firm will be reporting a capital deficit.

Capital resources per MIPRU 4 (home finance and non-investment insurance intermediation)

Questions 24 - 32 (Incorporated firms)

24. Share capital is the 'ordinary share capital' and 'preference share capital' reported from your balance sheet.

25. Reserves are the accumulated total of all retained profit, appropriations from share premiums and other similar appropriations. Reserves would also include gifts of capital given by a parent company.

26. Interim net profits are the total interim profits (net of tax and dividends).

27. Revaluation reserves are unrealised reserves arising from the revaluation of fixed assets.

28. Eligible subordinated loans – Subordinated loans can only be eligible capital if they meet all of the criteria set out in MIPRU 4.4.7 and 4.4.8. Please see our FAQs for further information on the criteria which must be met to enable a subordinated loan to be used as eligible capital.

29. Less investments in own shares – Any 'investments' in the balance sheet (RMA-A 3B) which are invested in the firm's own shares must be inserted in this box for deduction.

30. Less intangible assets – This must be the same figure inserted in (1B) of RMA-A.

31. Less interim net losses should be inserted in this box when they have not already been incorporated into the 'reserves'.

32. Capital resources are calculated using the following formula:

(24A + 25A + 26A + 27A + 28A – 29A – 30A – 31A).

Please note that this must be the same figure as the figure in (9A).

Questions 33 to 39 (Unincorporated firms and limited liability partnerships)

33. Capital of a sole trader or partnership is the total net balance on the firm's capital accounts, current accounts and any other reserves.

34. Eligible subordinated loans – Subordinated loans can only be eligible capital if they meet all of the criteria set out in MIPRU 4.4.7 and 4.4.8R. Please see our FAQs for further information on the criteria, which must be met to enable a subordinated loan to be used as eligible capital.

35. Personal assets not needed to meet non-business liabilities – Sole traders and partnerships may use personal assets as eligible capital unless:

i) these assets are being used to meet liabilities relating to other non-FCA activities (including personal and other business activities): or

ii) the firm holds client money or other client assets.

36. Less intangible assets – This must be the same figure inserted in (1A) of RMA-A.

37. Less interim net losses should be inserted in this box when they have not already been incorporated into the firm's capital or current accounts.

38. Less excess of drawings over profits for a sole trader or partnership – Firms should include any excess capital removed from the firm over and above any profit made by the firm for deduction.

39. Capital resources are calculated using the following formula:

(33A + 34A + 35A – 36A – 37A – 38A).

Please note that this must be the same figure as the figure in (9A).

Questions 40 to 55

40. Paid up share capital - This should exclude redeemable preference shares which fall due within two years.

41. Eligible LLP members’ capital - This should include LLP members capital.

42. Share premium account – The difference between the cash received in exchange for ordinary share capital and the face value of the shares issued.

43. Audited retained profits – Refer to IPRU-INV 13.15.4R for adjustments to be applied when calculating retained profits.

44. Verified interim profits – Refer to IPRU-INV 13.15.3R (Note 1)

45. Revaluation reserves are unrealised reserves arising from the revaluation of fixed assets.

46. Short term subordinated loans - Include short term subordinated loans as capital resource, under conditions referred to in IPRU INV CH 13.15.7R 

47. Debt capital – Please refer to the handbook definition of ‘Debt capital’.

48. Balances on proprietor’s or partners’ capital accounts - Refer to IPRU-INV 13.15.4R 

49. Balances on proprietor’s or partners’ current accounts - Refer to IPRU-INV 13.15.4R 

50. Personal assets - A sole trader or a partnership may include personal assets (based on a current independent valuation) to make up any shortfall in the required capital resources needed to meet its capital resources requirement. The assets must be discounted by the factors used for the calculations above in this Table and must not be needed to meet liabilities arising from personal activities or another business activity not regulated by the FCA.

51. Less intangible assets – Deduct intangible assets in full.

52. Less material current year losses - Deduct any material current year losses.

53. Less excess of current year drawings over current year losses – Deduct any current year drawings over current year losses.

54. Less excess LLP members drawings - Any excess of drawings over profits for a sole trader, partnership or LLP, should be calculated in relation to the period following the date as at which the capital resources are being calculated. The figures do not have to be audited to be included.

55. Capital resources is calculated using the following formula:
(40A + 41A + 42A + 43A + 44A + 45A + 46A + 47A + 48A + 49A + 50A – 51A – 52A – 53A – 54A)

Please note that this must be the same figure as the figure in (16A)

Further information

RMA-D Frequently Asked Questions