The Association of Professional Financial Advisers has told the Financial Conduct Authority it needs to choose between enforcing the Mifid II rules on phone recording, or pursuing a “common sense” approach to help advisers.
In its response to the FCA’s discussion paper on implementing the European Markets in Financial Instruments Directive to UK law, Apfa called for the regulator not to ‘gold plate’ the telephone recording requirements.
If the FCA applies the amended Mifid framework, advisers will need to take all reasonable steps to record relevant telephone conversations, face-to-face meetings and electronic communications relating to actual or proposed client transactions.
During stakeholder engagement, the regulator said it widely heard that advisers vary in terms of their commercial practices concerning record-keeping and for some smaller firms this requirement will represent a significant change, with concerns raised in respect to the likely costs involved.
Apfa pointed out that the directive’s aims are to counter market abuse and provide a record for consumers, noting that for equivalent measures in advice, market abuse is irrelevant and the suitability report provides more than adequate records of recommendations.
Chris Hannant, director general of the trade association, demanded that the FCA make a choice between ‘gold plating’ the directive “or pursuing a common sense approach to help firms at no risk to consumers”.
Speaking to FTAdviser last month, he said that the directive text was “quite grey” and that recording telephone conversations “could be overkill”, due to the fact that advisers are already obliged to do an advice suitability report.
Mifid II also includes a new standard of ‘independent’ advice, which requires firms to assess a ‘sufficient range’ of products, as opposed to the FCA’s current ‘comprehensive and fair analysis’.
Mr Hannant commented that there should only be one standard of independence. “We support Mifid II’s standard as it better reflects the guidance the FCA has issued and the standard it seems to expect.”
This chimed with the Wealth Management Association, which earlier this week called on the regulator to scrap the “failed” RDR definition of independent advice, stating that the Mifid II concept of independence better reflects “the generally understood dictionary definition of independence”.
The second iteration of the Mifid passed into EU law last July and must be implemented within member states by January 2017.
peter.walker@ft.com
