There are gaps in the Financial Conduct Authority’s guidance on what is expected from firms when it comes to retaining instant messages with clients, archiving and compliance firm Smarsh has warned.
Its poll of more than 100 financial services firms in the UK, conducted between March and June this year, revealed 69 per cent were asked to show email records and 39 per cent were asked to supply telephone call logs and recordings.
The research also showed that the regulator asked 36 per cent of those polled to show instant messages sent to their clients and the same amount were asked to hand over chats they had via websites.
This contrasts with the US, where a poll of 300 firms between March and June by Smarsh found email was also primarily requested (76 per cent) by their regulator, but telephone call logs and recordings came in at only 7 per cent.
Anna Carless, marketing director for EMEA at Smarsh, said the growing demand by the regulator to see e-communications highlights that more is needed to clarify what records it expects advisers to hold.
“Published regulatory guidance varies from one electronic communication channel to the other both in terms of retention periods and ongoing supervision requirements. It is therefore difficult for firms to establish what is expected of them.
“The FCA makes it clear they expect access to firms’ data, across the spectrum of electronic communications, to be made available on request. Firms appear to be very comfortable with email and voice recording obligations, but when it comes to newer channels, such as social media and instant messaging, firms are in the dark.”
The FCA’s standards for keeping reports state a firm must retain its records relating to suitability indefinitely if relating to a pension transfer, pension conversion, pension opt-out or free-standing additional voluntary contribution.
If relating to a life policy, personal pension scheme, stakeholder pension scheme, Mifid or third country business, records of suitability must be kept for five years. For any other case, records must be retained for three years.
Mifid II currently includes proposals for the recording of telephone and electronic communications. In a recent discussion paper, the FCA asked for views on how this could be applied proportionately.
The European recording requirements have been proposed to help track market abuse, for which the regulator feels it would make sense to record both electronic and telephone conversations.
The FCA’s discussion paper stated: “Although market abuse in relation to retail financial advisers is unusual, there have been examples in the past where a recording requirement would have been useful, in detecting whether a retail financial adviser has been facilitating market abuse.”
The FCA declined to comment on Ms Carless’s comments or the results of Smarsh’s survey.
emma.hughes@ft.com
