European Union requirements for adviser firms to record all client telephone calls have been branded a 'step too far' by members of the New Model Business Academy.
The incoming Markets in Financial Instruments Directive II (Mifid II) has indicated advisers must record all client phone conversations.
Tom Hegarty, managing director of the New Model Business Academy (NMBA), called Mifid II, which is set to be implemented on 3 January 2018, the "next industry regulation shake up", and said advisers had expressed deep concern about the details of what the new rules might mean.
Mr Hegarty said: "It is not clear yet how much of the proposed changes will be applied and imposed on our now ‘Brexit’ nation, but the part of Mifid II most reported on is the potential call recording requirement.
"It is an unfortunate fact of our industry that almost no adviser is safe from the possibility of a client complaint and the experts at EU HQ feel the recording of all client telephone conversations will provide necessary protection against the innumerable future complaints of the advising population."
A survey carried out among members of NMBA revealed 85 per cent - out of 332 respondents to the poll - agreed this was a step too far.
Mr Hegarty commented: "We had our largest response to a survey yet, with 332 of our NMBA members responding. This overwhelming response tells us that this is an emotive issue and one which advisers feel very strongly about."
According to Mr Hegarty, although once implemented it is likely the requirement would eventually become forgotten about, as it is unnoticeable, the problem goes far deeper.
He quoted responses from some of the NMBA members. Comments included:
- “If you do the job right, if you genuinely have clients’ interests at heart, the need to recall every conversation doesn’t exist. You’ll never get a true conversation either – too guarded. It would, in my humble opinion, be madness to encourage this.”
- “It should not be necessary and would restrict the extent to which the IFA could offer helpful comments which could later be misconstrued as “advice” by litigious individual encouraged by lawyers.”
That said, some members do already record calls. One member commented: “We have been recording calls both in and out since December 2010. It costs us just £1 plus VAT per month for each telephone number, with no hardware at our end.
"We save all our telephone calls (which are attached to emails) with our ISP, which costs us an extra £1.00 plus VAT per Gigabyte per month. Therefore the cost of recording/storage is extremely low and well worth the extra protection it offers us.”
Mr Hegarty added: "Clearly, a large proportion of NMBA members are concerned that call recording would undermine the trust that clients have for their adviser and are naturally reluctant to add another level of scrutiny and compliance.
"However, the costs of implementing this are low and it would provide an additional level of protection for both clients and advisers.
"If calls had to be compliance checked and audited, that would be a completely different story and almost definitely a step too far for most, although some advisers are happy to implement as much protection against themselves and their business as possible."