Mifid II  

Advisers could benefit from Mifid II recording rules

Advisers could benefit from Mifid II recording rules

Advisers could benefit from the Mifid II requirement to record some phone calls, despite the initial hassle of complying with the rule.

In September the Financial Conduct Authority launched a consultation on its implementation of Mifid II, revealing that it was considering telling advisers to record some telephone calls.

The regulator has had a taping policy in place since 2009 which does not include advisers, but it is reviewing this as part of its work to introduce the new European rules.

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Andy Sutherland, managing director of advisory services at TCC, formerly known as The Consulting Consortium, said there would be an initial financial outlay for advisers complying with the rules but he said they could benefit in the long-run.

He said: "The deadline for Mifid II implementation creeps ever closer, but the industry is taking its time to react and prepare for one of the most disruptive aspects of the legislation - the expansion of the taping regime.

"The core concern of financial advice firms captured under the taping regime is the potential cost of implementing the necessary technology. However, if firms take this as an opportunity for data analysis, beyond simple call recording and storage, there is the potential to reap a return on the investment, despite initial financial outlays.  

"Harnessing the power of data intelligence derived from the recorded conversations is key. This could be utilised for real insight into a firm’s processes, market and customer intelligence, which in turn would enable them to determine how to increase process efficiency and effectiveness.

"It would also help to drive customer loyalty and mitigate potential costly regulatory risks in the future.

"It is important for firms to remember that the aim of the legislation is not to record and store conversations, but to promote greater transparency and increased investor protection. Firms therefore need to be considering whether the steps they take to comply with the taping regime under Mifid II first and foremost enable them to achieve this objective."

The FCA said taping phone calls could help the Financial Ombudsman Service get to the bottom of certain complaints but said it is open to considering "an alternative approach", particularly for smaller financial advice firms concerned about the cost.

It 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.