Commission accounted for 26% of revenue earned by advisers in 2016, an FCA report found.

Fees and charges accounted for 71%. The figures come through the Retail Mediation Activities Return data, released today.

In 2015 commission accounted for 31% and fees/charges for 64%.

The FCA report stated: “This reflects the continuing trend since the implementation of the Retail Distribution Review at the end of 2012 on the way firms earn revenue from retail investment business.

“Under the rules introduced after RDR, firms are no longer permitted to earn commission from new advised business but they can still receive commission from legacy (pre-RDR) business subject to certain conditions and from non-advised business.”

Revenue from retail investment activities has been growing steadily over the past few years, the FCA stated.

Total reported annual revenue increased by 8% between 2015 and 2016 and by 25% between 2013 and 2016 (from £2.6 billion to £3.25 billion).

The number
 of firms reporting revenue from
retail investment activities has also increased - there were over
 370 more firms in 2016 than in 2013 (an increase of 8%).

For those firms categorised as financial advisers, many earned revenue from activities other than their retail investment business – 88% also earned some revenue from insurance mediation and 45% from mortgage mediation, although these only account for a relatively small proportion of the overall revenue earned from the three activities (11% and 5% respectively).

The Retail Mediation Activities Return was originally introduced in April 2005 (by the FSA) and is the core regulatory return submitted.

The RMAR has 11 sections, covering different aspects of a firm’s business including 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, depending on the type of business.