The colossal scale of the MiFID II challenge is self-evident, not only for banks and fund managers but for financial advisers as well. In the lead up to the January 2018 implementation date and following the publishing of the regulatory technical standards, there will inevitably be a mad flurry of activity with firms working all hours to make their systems and processes compliant. However, before then, what should not be forgotten is the low-hanging fruit that compliance officers can pick now.
One of those low hanging fruits is the new requirements around the recording and archiving of calls – both fixed line and mobile. Call recording in financial services is not new and the Financial Conduct Authority (FCA) has already mandated that anyone directly involved in equity trading needs to have their calls recorded.
This requires over 30,000 workers in the City of London alone – at a cost of up to £120 per head, per month – to have their mobile calls recorded. While this is a challenge for some firms, it is certainly not insurmountable.
However, what some financial advisers and wealth managers may not realise is that in less than 22 months’ time, when this European directive comes into force, they too will be required to record all of their calls. MiFID II’s wording is very clear – anyone involved in giving advice that may lead to a trade must not only record their calls, but has to securely archive these conversations for up to five years.
While global trading houses may be comfortable paying up to £120 per month to have the mobile phone calls of their top traders recorded, this is a price-point that is simply out of reach for many advisers, particularly the smaller financial advice outfits.
Cost aside, there are also practical implications. Today’s working styles are not straightforward, with the lines between business and personal becoming increasingly blurred. Those who work from home, or on the road, need the ability to distinguish between what is personal and business related. Ask yourself, have you ever made a business call on your personal handset? Financial advisers and wealth managers could be unwittingly breaching regulation if this difference is not made clear.
Furthermore, as many wealth managers work in teams across a pool of clients, it is often the case that a call to a wealth manager may need to be handled by the support staff, who themselves may be working in a variety of locations using any number of different devices. Ensuring that all calls are recorded across these locations and devices is a challenge that very few services can address.
But the benefits of call recording go beyond basic compliance – it can impact your bottom-line. In the retail banking sector, for example, the payment protection insurance compensation pay-outs demonstrate that the regulators take a dim view on information blackspots when it comes to client engagement.
In today’s regulatory environment, best practice is to record all interactions with clients, from telephone conversations, written correspondence and emails, to face-to-face meetings and even social media engagement. While call recording is potentially one of the easier aspects of compliance, if it is not implemented correctly or on time, financial advisers and wealth managers could end up receiving undue scrutiny from the powers that be.
In a recent survey, here are the ten key features financial services firms singled out when it came to mobile phone recording:
1. Compliance: Any solution will need to work within the current and future parameters defined by the FCA and MiFID II.
2.Affordable: While global investment banks have deep pockets for call recording, paying up to £120 per month per person is not a reasonable price point for the whole market. An acceptable market price for a solution is an extra £10 to £20 per month over a standard bill.
3. Simple to implement: Given many companies that occupy the market are small or micro companies without any IT support, an easily implementable system is essential.
4. Compatible with alternative mobility strategies: Companies operate differently – it is important for any recording solution to work with the strategies that are already in place, be these corporate devices, ‘bring your own device’ or a combination of these.
5. Controls to ensure business calls are recorded, while ensuring personal calls remain private.
6. Supports existing on-premise solutions for the storage and retrieval of recorded calls.
7. Support cloud-based solutions for storage and retrieval of recorded calls.
8. Ubiquitous: Works across all network providers and mobile handsets.
9. Enables a subscriber to keep their current mobile number.
10. An end-to-end solution: Companies that are new to the requirement of call recording are looking for a complete solution including recording, storage, eDiscovery and retrieval without the need for on-premises equipment or personnel.
This will inevitably be a challenge for many companies but not taking action over these regulatory changes could be costly. At its heart, call recording really is about protecting both reputation and revenue.
MiFID II has been a talking point for years now and the wide-ranging changes that it will bring about have already sent shock waves throughout the financial services industry. The phrase “don’t sweat the small stuff” simply does not apply when it comes to regulatory issues.
Thankfully, the delay in MiFID II’s implementation gives financial advisers and wealth managers the time to breathe and get their respective houses in order. While businesses wait for the regulatory technical standards to be published, there is a lot of action that can be taken to be as prepared as possible for January 2018.
Mobile call recording is comparatively low-hanging fruit that can be seized immediately without further guidance from the European Securities and Markets Authority. Therefore, now is an opportune moment to address this area of MiFID II, before tackling its more complex parts.
James Foley is vice-president of customer experience at BT smartnumbers
| Key Points |
The colossal scale of the MiFID II challenge is self-evident, not only for banks and fund managers but for financial advisers as well. In less than 22 months’ time, when this European directive comes into force, they too will be required to record all of their calls. In today’s regulatory environment, best practice is to record all interactions with clients. |
