The FCA says its proposal to make advisers tape telephone calls under Mifid II is a ‘proportionate’ response to the legislation and should not be onerous for advisers.
The regulator today released its third Mifid II consultation paper, which includes the suggestion to extend the recording requirement to all “Article 3” firms, which includes financial advice firms and corporate finance boutiques.
FCA policy, strategy and competition director David Geale says the requirement to record calls would not place an undue burden on IFAs.
Geale says: “We believe that the taping of telephone calls need not be onerous or expensive. Technology exists to enable advisers to record and store calls easily and affordably, we therefore believe it is proportionate to require firms to tape calls.”
However, the FCA says it is still open to suggestions about other approaches that provide the same level of protection as taping but cost less, particularly for smaller firms.
Geale says: “Some industry respondents to earlier discussions raised concerns about the cost and practical implications for small Article 3 financial adviser firms. Our implementing approach for these firms remains open and we welcome alternative proposals that meet an analogous outcome to taping.”
The regulator was clear the proposal is not specifically aimed at telephone-only advisers and the change will help with Financial Ombudsman Service complaints as well.
Geale explains: “”Having a recording as a record of a conversation can be helpful to the client and the firm because you have a proper record of what was said rather than two people’s reflections which could be very different. We think it is a sensible step. We think it can help with our supervisory and enforcement processes, and it can help both firms and consumers when complaints are considered by the financial ombudsman.”
Advisers would be required to keep recordings for five years.
The regulator says it will also be releasing a fourth Mifid II consultation paper. Money Marketing understands the paper will be released in December and will cover issues the regulator could not deal with until the Treasury publishes its own policy statement and further consequential changes to the conduct of business handbook.