Phone tapping firms give Aifa hang up

Adrian Lowe, compliance consultant, and Rebecca Oliver, director and business consultant of Gloucestershire-based compliance and business solutions company AML Consulting, said their IFA clients had been contacted by companies stating they should install recording equipment by 6 March 2009 or they would fail to comply with FSA rules.

However under the FSA's consultation paper 07/9, entitled Conduct of Business Regime: non-MiFid deferred matters - which includes proposals for telephone conversation taping - it stated firms covered by the requirement to keep this type of record include banks, stockbrokers, investment management firms generally and insurance companies.

While IFAs firms can choose to record telephone conversations to document the dialogue that takes place with their clients, the City watchdog confirmed IFAs were not required to buy such equipment in order to do so.

Andrew Strange, policy director of the Association of IFAs, said Aifa would be re-issuing their guidance on the matter after Financial Adviser revealed the mailing received by AML Consulting's IFA clients was sent out only last week.

He said: "It is always disappointing when firms try to target other firms inappropriately. I am happy to put out the guidance again to members and remind them of the facts. The FSA clearly has not changed its view on this.

"We put out a reminder to members in October last year when CP 07/9 was first circulating. It was the FSA's firms contact centres that were receiving the most enquiries and we wanted to make it clear that IFAs were excluded from the requirements to record calls."

Aifa's guidance stated: "The FSA's firms contact centre has received a significant number of calls from IFAs asking if the proposed requirements on taping apply to their firms. These enquiries appear to have been triggered by taping equipment suppliers who are cold-calling firms and telling them that recording conversations is a mandatory requirement of the FSA.

"The FSA has asked us to let members know that IFAs are excluded from the requirement to record calls although some firms may choose to do so."

Stephen Hanks, manager in wholesale and prudential policy for the FSA, said: "I can confirm that IFAs are outside the scope of our taping rules.

"When we first became aware that IFAs were being targeted by phone companies we spoke to Aifa to alert them and to make the position clear."