The Financial Conduct Authority is looking at whether to force all financial advisers to record some of their telephone calls.
The regulator has had a taping policy in place since 2009 which does not include advisers, but has reviewed this as part of its work to introduce new European rules.
Now the regulator has proposed applying a taping regime to all Article 3 firms - including financial advice firms - according to a consultation released today (29 September) on Markets in Financial Instruments Directive II implementation.
The paper said: "This is because based on information from the Financial Ombudsman Service the majority of complaints about investments centre on the conversations that happened when they are sold.
"We think taping conversations between firms and their clients is likely to be an effective way of advancing our consumer protection objective.
"However, we remain open, particularly for smaller financial advisers, to considering whether an alternative approach could help us to achieve a similar level of consumer protection in this area as taping but at a lower cost for firms."
The FCA is to apply the same approach to firms carrying out non-Mifid collective portfolio management activities, and proposes to extend the rules to corporate finance business.
The regulator said: "We believe that the taping regime is a valuable means of gathering evidence in the context of market abuse and related regulatory breaches, and that these provisions are just as relevant to the activities of non-MiFID firms. We therefore propose to retain a taping regime for these firms"
The FCA is proposing to apply a taping regime to a wider range of activities than those required by the directive, which include the service of portfolio management, including removing the current qualified exemption for discretionary investment managers, corporate finance business, energy market activity or oil market activity and the activities of collective portfolio managers.
Under the Mifid II rules firms will also have to retain recordings for five years, as opposed to six months under the FCA's regime.
