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FCA: Phone recording rule is ‘proportionate’ for advisers

David-Geale-700.jpgThe 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.

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. Why would you NOT want concrete evidence of what was discussed?

  2. How would you record a call on your mobile whilst you are out?
    Is there going to be a need to have it on your home phone, mobile phone, office phone?

  3. Just been talking about the proposed requirement.

    Here some of the cost

    COST

    Taking all this into consideration how much does call recording actually cost? We have outlined come indicative costing below, taking into account implementation, training and support.

    • For a 24 channel digital system with basic search & replay the cost would typically be between £13,000 – £16,000.

    • For 30 users of VoIP with Quality Monitoring the costs can range from £20,000 – £25,000

    • For 16 channels of analogue with basic search & replay the range would be £12,000 to £15,000.

    You could get a VIOP phone system one I goggled
    You could get a VIOP phone system one I goggled cost an addition 2.5 plus VAT per call

    Cheap options that I have used in the past tape recorder preferably digital £180 Telephone pickup microphone. £ 23 Docking station £73.00 Just inform everybody you have to record the call for regulatory purposes Switch on and off you go

    They can be saved as a DSS file in clients file or on back office contact history The recording can be heard using a DDS player.

    As I did the other day sent the recording sent in DSS format and a dss player by e-mail

    The only point I will have to Clarify with OFFCOM is this is PCI DSS compliant

    Now we will all be Inundated with phone companies selling their wares

  4. David Gealee says the requirement to record calls would not place an undue burden on IFAs and would not be expensive. He would say that, wouldn’t he? I can’t think of a single scenario in which access to a recorded call would have resolved any issues or misunderstandings. I ensure all my advice is fully documented in writing not just the final suitability letter. Why can’t small IFAs like myself decide to rely on written records a full and final records of dealings with clients? I am prepared to take the risk.

  5. Considering I never give “advice” over the telephone that isn’t then followed up in writing this is just duplication of record keeping.

    Just have a quick look online and lets just ignore the £100’s in cost that these recording packages cost, probably need to replace my office phones as well, avoid talking to clients on my mobile, the logistic of keeping audio files for 5 years (or beyond) will also require significant PC storage costs and responsibility to archive against a specific client.

    In reality if we want to use such recordings to keep FCA/FOS at bay then we have to store this data forever! What is to stop this being mandated for all face-to-face advice as well.

    Seriously thinking of taking my landline out and telling clients to fax or email me in future!

  6. So, only keep for 5 years but claim indefinitely ??!!
    Additional costs to small firms and a total waste of time – who ever seriously relies on anything verbal rather than in writing ?

  7. Please replace earlier post

    David Gealee says the requirement to record calls would not place an undue burden on IFAs and would not be expensive. He would say that, wouldn’t he? I can’t think of a single scenario in which access to a recorded call would have resolved any issues or misunderstandings. I ensure all my advice is fully documented in writing not just the final suitability letter. Why can’t small IFAs like myself decide to rely on written records as a full and final audit of dealings with clients? I am prepared to take the risk of not having telephone records.

  8. There are obvious practicalities that need to be overcome. The FCA also needs to educate clients as to what needs to be done; that it is not an adviser led requirement. Biggest issue I have at the moment though is the 568 pages of the Consultation Paper!

  9. Four Candles

  10. I find it hard to understand how this will achieve anything except for firms which regularly provide telephone advice, and I would expect such firms to record calls already for their own protection.

    My telephone calls with clients are usually to arrange meetings, to generally catch up, or to tell them that my Southern train has been cancelled and I’ll be late again. Does the FCA really want us to record all of this? There IS a time-cost involved in recording a call, downloading it, indexing it and storing it on a client file and it is unacceptable that either we or our clients should have to cover the cost of storing such mundane information.

    My greater concern is that I have a very close, friendly relationship with most of my clients. They tell me about their their children’s exploding nappies, their mother in law’s hip replacement and their a**ehole bosses (all true examples) and they are unlikely to want this type of conversation stored on their files. This type of discussion encourages clients to open up and ultimately improves the service we provide.

    It’s getting impossible to say anything to anyone without the risk of it coming back to haunt you. Perhaps a client opt-out will be feasible?

  11. Yet again, out of step with the industry and the type of firms they regulate based on the responses here, ours being one of them !

    Galling!!!

  12. I don’t really care what David Gealee says on whether HE thinks it wont be much more of a burden or inexpensive !

    The fact remains it is irrelevant whether its big or small, cheap or expensive, it is still extra to what is piled on us already !

    In a world, where we are bogged down with unreasonable and out of touch rules and regulations, here we are, with yet another level of procedure to deal with added costs both in time and pound notes.

    Just for once, I would like the freedom of choice ! as a person who runs his own business, a person who takes the risk in doing so and contributes to the countries economy,

    Do I live in a country that promotes freedom of speech, promotes, fair and just human rights for all, do I live in a country that has just voted for Brexit to rid ourselves of stupid rules and unreasonable regulations ?

    Its matters very little, how small of an issue this is, the fact remains it is another shackle of slavery

    I cast my vote, so I have a choice, however I am denied any such choice, in my work, for my clients, and in my business………

    The straw may not be that big, but it will do for the camel just the same……

  13. Simple solution – don’t talk to clients on the phone – you then have to go to see them or they
    have to come to see you for everything they want to discuss, so fees go up massively, you loose the clients and there is then no longer a problem – as you are out of business !!

  14. Didn’t “taping” go out more than a decade ago? Is Mr Geale referring to cassette tapes, reel to reel or DAT? He’s obviously not quite up to speed with contemporary technology. Perhaps he still dictates all his written communications into one of those hand-held micro-cassette recorders which the rest of us stopped using 20 years ago.

  15. I still “tape” stuff on my TiVo, like I still hoover with my Dyson. So I doubt that this indicates that Gealee is out of touch with technology, but he is clearly out of touch with what the industry and its customers want. I also considered DennisB’s suggestion as I don’t use the phone much at all but I fear that it would look artificial if we have no recorded phone calls at all. I guess it depends whether each phone call will need to become an integral part of a client file, or just part of a phone call database that is only accessed in event of a complaint. It’s probably there in the 568 pages.

  16. I don’t suppose there’s the slightest chance that:-

    1. the FCA undertook any sort of Cost:Benefits Analysis on this. Or that

    2. It’s prepared to publish for all to see and to debate in open forum all the responses to its “consultation”, along with

    3. Its reasoning for rejecting/dismissing those responses which happened to not to accord cosily with the predetermined out come of the consultation.

    No? Thought not.

  17. I have no idea which ‘problem’ this is meant to solve.

    I can see it leading to advisers giving generalised non-committal answers to many client enquiries and, similarly, I can see some clients being unwilling to discuss personal issues for the fear of a recording being used against them (by HMRC, for example).

    On balance, this doesn’t seem very sensible for small businesses.

  18. The rules state a suitability report, NOT letter and in a durable medium and electronic backed multiple copies are more durable than paper. An audio recording proves what was said & tone of voice, video is even better. A typed report after the event proves nothing.

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