Advisers to record telephone calls under FCA Mifid rules


The FCA is planning to extend the requirement to record telephone calls under Mifid II to advisers.

In a consultation paper released today, the regulator proposes extending the recording requirement to all “Article 3” firms, which includes financial advice firms and corporate finance boutiques.

It says Financial Ombudsman Service information has shown the majority of complaints about investments centre on the conversations when investments are sold.

The consultation paper says: “We think taping conversations between firms and their clients is likely to be an effective way of advancing our consumer protection objective.”

Under Mifid II firms are required to record telephone conversations and electronic communications that relate to “the reception, transmission and execution of orders, or dealing on own account.”

These recordings must be held for at least five years. 

The regulator says it is will consider alternative approaches for smaller advice firms to help lower costs.

Last year, the FCA confirmed that advisers will not have to record face-to-face meetings under the Mifid rules.

The consultation paper also includes proposals to extend Mifid II’s inducement ban for firms giving investment advice to retail clients.

The proposals are:
– to extend the ban to restricted advice, as well as independent advice
– to ban the rebating of inducements to retail clients, and
– to amend the adviser charging rules to apply the inducements ban to the “business of providing advice” rather than only to inducements provided in giving a personal recommendation.

The regulator had previously held off on publishing the results of a review into inducement deals between providers and advisers because of upcoming changes to the rules under Mifid II.

FCA chief executive Andrew Bailey says: “The changes to the rules we are proposing today reflect key themes that we have worked on in both retail and wholesale markets over recent years to promote competition and market integrity.”

Bailey adds: “As we said in our statement following the EU referendum result, firms must continue to abide by their obligations under UK law including those derived from EU law. They must continue with implementation plans for legislation that is still to come into effect, of which Mifid II is one such example.”

The FCA says how it is adopting Mifid II is consistent with the Financial Advice Market Review’s recommendation that the regulator should help firms to deliver streamlined advice.

Mifid II comes into effect on 3 January 2018.

The consultation closes on 4 January 2017 with a further consultation expected to be published before the end of this year.