There have been changes made to the financial industry legislation with a significant focus on conversation recording. The legislation called Markets in Financial Instruments Directive (MiFID) has stemmed from the EU. Regardless of the outcome with Brexit, it will remain in effect and enforced by FCA.
MiFID covers a vast amount of legislation relating to the financial industry but the most recent changes (MiFID II) relates to call recording.
It requires you to record all conversations relating to a financial transaction (even if the transaction was not completed.) This only applies to external conversations. However, you cannot simply just record the conversations and class as “complying.” You must also store the records securely for 5 years and ensure that the system does not fail which means regularly testing it. MiFID II takes it even further as you will need to record your testing process, too.
Who will be affected?
It’s important to note that not all of the financial industry is required to comply; the main institutions will be Banks, Stockbrokers, Investment Managers, Corporate finance firms, Insurance Brokers and Independent Financial Advisors.
Why has this happened?
The FCA concluded in their consultation paper (https://www.fca.org.uk/publication/consultation/cp16-29.pdf) that “Based on information from the Financial Ombudsman Service, the majority of complaints about investments centres are on the conversations that happened when they are sold. We think taping conversations between firms and their clients are likely to be an effective way of advancing our consumer protection objective”.
In other words, it is to keep the financial industry ‘honest’, as always it’s always the naughty few that give the industry a bad name, resulting in the need for businesses to prove their innocence.
How can we comply?
The legislation doesn’t just apply to record your phone lines, it also applies to mobiles, SMS, Email, Instant Messaging and face-to-face. This means that all of those communication channels need to be recorded and the conversations stored securely for 5 years.
The solution to this lies mainly in your systems, particularly your phone system. For instance, Hosted Telephony is a great way to record conversations and store them securely. You can also, extend that to business mobiles. If you need an all-in-one solution, we do have a great MITEL system which is great for recording all aspects required by this legislation.
It’s important to remember the storage element of this legislation as you need to ensure it is in compliance in addition to existing data protection and privacy laws.
When will it come into place?
I’m afraid that it’s already in place as it came in effect from 3 January 2018, so if you are reading this blog, it’s imperative that you take action now!