IFAs falsely targeted over FSA telephone recording rules

Last March, the regulator outlined new rules which will require some firms to tape some client telephone calls, as set out in its policy statement 08/1 'Telephone Recording: recording of voice conversations'.

The aim of the rules, which are set to come into force in March this year, is to tackle market abuse and improve the FSA's ability to deter and enforce against it.

However, Per Oszadlik, senior consultant at Caledonia Consultancy, warned IFAs not to believe claims that they need to act quickly in order to meet the new rules, as the rules do not apply to retail financial advisers.

Oszadlik told FTAdviser: "IFA firms are being targeted by telecommunications companies telling them they really need to do something quickly as the rule changes come into affect in March and they’ll be caught by them, but it doesn’t apply to IFA firms."

An FSA spokesman confirmed that it was not necessary for financial advisers to comply with the new regulation.

"There are new requirements coming into force in March, but the rules exclude retail financial advisers," the spokesman said.

In a statement, the FSA added: "We have had several calls from financial advisers who were targeted by technology providers informing them that they are within the scope of the proposals and would be required to record their calls. This is incorrect.

"We have also seen some advertisements which completely misrepresent our rules and try to persuade firms that they should buy extra services. These services are not required by our rules."

According to the rules, insurance brokers, mortgage brokers, solicitors, estate agents and those receiving and executing loans are also excluded.

The new rules are, however, relevant to firms which receive client orders for the conclusion of transactions in the equity, bond and derivatives markets, and could include dealers and brokers, stockbrokers and investment management firms.

Expressing his annoyance at the confusion, Evan Owen, chairman of the IFA Defence Union, rested the blame at the foot of the regulator for not being clear enough in its communications.

Owen described it as "yet another example of the 'one size fits all' regulator misleading all and sundry".

Meanwhile, Séan Ryan, director of 500 Limited, a provider of business grade IP telephony solutions to the SME market, added: "It’s not so surprising to hear that some telecommunications companies may be miss-selling call recording products and services following the FSA’s policy statement.

"Ignorance regarding the applicability of the policy may be being used as an opportunity to push call recording to companies who do not require it."

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