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FCA rolls back on Mifid II client call recording rules

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The FCA has amended its proposal to require advisers to tape telephone calls under Mifid II by saying they can also make a written note of the conversation.

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

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.

At the time, the regulator said it would consider alternative approaches for smaller advice firms to help lower costs.

In its consultation response, Apfa urged the FCA not to “gold-plate” the telephone recording requirements in Mifid II because the measure was disproportionate for the adviser market.

In a policy statement published today, the FCA says: “Based on the responses received and following extensive industry engagement, we have concluded that additional flexibility for all Article 3 retail financial advisers is appropriate. This is because the business model of many of these firms is such that a full taping obligation may not always be proportionate.

“As such, we will propose that these firms, irrespective of size, can comply with the ‘at least analogous’ requirement by either taping all relevant conversations or taking a written note of all relevant conversations. The decision to tape or take a note should be taken at the level of the firm rather than in relation to individual relevant conversations or the relevant conversations of different advisers. This flexibility will not be available to Mifid investment firms who can be characterised as retail financial advisers.”

The statement adds: “We are still in the process of determining what details firms must include in this note, ahead of the full rules being published in June. This is because in order for the note to meet the ‘analogous’ requirement under Mifid II, it must have an analogous outcome in terms of advancing our consumer protection objective. Firms will not be able to rely solely on their current record keeping requirements to meet this objective.”

The regulator will include its rules on taping in a policy statement scheduled to be published in June.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. The FCA has amended its proposal to require advisers to tape telephone calls under Mifid II by saying they can also make a written note of the conversation.

    All that time and effort to come up with what we are already doing when will they stop wasting our money on wishey washie ideas.

  2. robert milligan 31st March 2017 at 2:37 pm

    I have just set up 100% Call Recording, at my cost, much better than what was written down or what may have been written down!!!! why so much fuss, and its really quite affordable and simple

  3. Richard Bennett 31st March 2017 at 2:44 pm

    I didn’t know what “analogous” means- “similar” would have sufficed!

  4. Neil F Liversidge 3rd April 2017 at 9:34 am

    @Robert Milligan: You are right that the recording part of the exercise is not technologically difficult. The expensive (in time terms) onerous and problematical part is the storage and indexing to make retrieval possible. There was pretty much universal agreement on that point when we discussed this at APFA’s council meeting. Not to mention the potential for deliberate timewasting by those with an axe to grind making subject access data requests.

  5. @Neil F Liversidge – That you mention around storage issues is for legacy solution where they record on-premise. With new cloud solutions out there which are now available through telephony service providers like Dubber, you can have cloud call recording all bundled up as a service and either only pay a fixed subscription fee or decide to go pay-as-you-go.

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