Mifid II  

True cost of having to tape client calls

True cost of having to tape client calls

Following the news the Financial Conduct Authority is looking at whether to force all financial advisers to record some of their calls, it has become clear that the cost implications are a grey area.

Phil Cording, sales director for Europe, the Middle East and Africa at provider of archiving and compliance solutions Smarsh, said the cost of taping calls would be related to the size and complexity of the trading environment.

He said: "Any investment in recording or archiving solutions can be quickly retrieved if trades require a greater degree of clarity post execution, need further investigation where compliance involvement is needed, and additionally where poor trading methods can be rectified through positive training using the recorded data as examples of how to improve trading process, interactions and approaches before the final agreement is reached."

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He added the return on investment of any taping solution is difficult to measure but added nobody had ever said the voice recording was wasted expenditure.

He said: "Very often when investigations by regulatory bodies has taken place it is the voice recording and analytical systems that can prove where and why the trade was executed proving out a positive rather than negative situation thus avoiding costly settlement or fines."

Mr Cording added over the last two decades the taped media has changed to become more agile, cheaper and easier to store with the latest solutions no longer rely on a physical media.

He said: "The solutions that once relied on a physical media are no long viable to maintain therefore specialist companies now provide the capability to transcribe the data onto spinning disc technology providing complete/controlled access without the necessity for propriety software, one such example is Nxtera."

Launched in 2006, Nxtera Ltd specialises in development and delivery of software based active testing and monitoring.

Scott Gallacher, director at Leicester-based Rowley Turton, said: "I can’t imagine that the storage of data will be an issue as I am sure that this will be managed by an appropriate recording systems, although naturally the cost of that system is a further cost of regulation that may ultimately end up being passed to the consumer."

Mr Gallacher questioned the fact that under the Mifid II rules firms will also have to retain recordings for five years, as opposed to six months under the current FCA regime.

He said: "I am somewhat sceptical of a five-year limit. As an adviser if I was going to tape calls I would want to keep those records for as long as we had any potential FCA or Fos liability, which would be much longer than five years.

"I’d imagine many who sold an endowment back in the 1980s wished they’d recorded their client conversations."

He added he does think a client will not like being taped, and presumed there would be a need to inform clients they are being taped, which would make the call seem very impersonal.