Regulation  

Commissioner suggests FCA records whistleblower calls

Last week the Financial Conduct Authority revealed the number of people offering tip-offs about wrongdoing to the watchdog declined for the second year in a row, despite the regulator investing in training to improve the way staff handle whisteblowers. 

In the 140-page FCA annual report and accounts it was revealed throughout 2016 to 2017 the regulator implemented a new case management system to improve handling of whistleblowing cases, and provide better analytics with outside organisations.

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Yet the number of reports it received has continued to fall.

In 2016 to 2017 the FCA managed 900 intelligence cases from whistleblowers and shared information with external bodies, including the National Crime Agency, police forces, HM Revenue & Customs and other UK and overseas regulators, in more than 100 cases.

Of the 900 reports, 119 were red flags raised about financial advisers, around 13 per cent of the total.

In 2015 to 2016, the FCA received 1,014 tip-offs and in 2014 to 2015 the regulator managed 1,340 whistleblowing reports.

The regulator also clarified when an investment adviser must tape conversations with their clients in a 1,068–page paper.

In earlier consultations with the FCA advisers questioned what they must do if a client is initially uncertain as to whether they wish to invest or if they make face-to-face contact or ring on a telephone line that can’t be recorded.

According to the regulator under the final Mifid II rules advisers are required to record conversations that result in a transaction being undertaken or that are intended to result in a transaction being undertaken. 

The investment advice is caught insofar as it relates to a specific transaction that the client wishes to undertake, the FCA added. 

But if, for example, the adviser imparts advice to the client who says that they need to go away and think about it, the FCA clarified it would not expect this conversation to be required to be recorded for the purposes of the telephone recording regime. 

However the watchdog noted there may be other record keeping requirements for this first meeting, for example for suitability report purposes. 

damian.fantato@ft.com