Regulation  

Apfa: Rules demanding adviser call recording ‘overkill’

Apfa: Rules demanding adviser call recording ‘overkill’

Incoming regulation which would force advisers to record all telephone conversations with clients have been deemed “overkill” by the Association of Professional Financial Advisers, which has said it is talking to the regulator about watering down proposals.

In a consultation paper on transposing parts of the European Markets in Financial Instruments Directive published in March, rules proposed recording everything, including telephone calls, face-to-face meetings and electronic communications relating to actual or proposed transactions.

Speaking to FTAdviser, Apfa director general Chris Hannant said that the directive text was “quite grey” and that measures such as recording telephone conversations “could be overkill”, due to the fact that advisers are already obliged to do an advice suitability report.

Article continues after advert

“The benefit to the consumer doesn’t add because the suitability report is already in place. The telephone adds nothing in terms of consumer protection but would add a burden to the financial adviser.”

The second iteration of the Mifid passed into EU law last July and must be implemented within member states by January 2017.

Speaking at an Apfa regional seminar in London yesterday, Mr Hannant said: “I’ve already mentioned Mifid II, Priips, IMD II, EU regulation; the real objective is to make sure come 2017 it has no impact on your business whatsoever.

“That’s probably a bit too high a standard to aspire to, we actually want to minimise the effect any of those measures will have when they come in.

“We are currently in discussions with the FCA for example on Mifid about the frequency of telephone calls, the need for telephone calls for advice and the blurring of reponsibilities between product providers and distributors.”

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.

In August last year, Clare Griffiths, the senior policy adviser at Apfa, expressed concerns about the potential cumulative effects of the new Mifid rules on the advice sector.

At that time, she said: “The measures being proposed include recording telephone calls, asking clients to sign minutes of meetings and specifying the time periods for issuing reports to clients and having reviews.

“This will add a significant burden to firms as the costs of compliance surge. Worryingly, it is smaller firms who will feel the impact of this the most.”

Ms Griffiths said this ultimately risked excluding even more consumers from being able to access affordable regulated advice, because the cost of the advice would “inevitably” increase.

ruth.gillbe@ft.com