As the FCA MIFID II deadline grows ever closer we look at the alternative to call recording for smaller companies and Independent Financial Advisors (IFA’s)
KEY DATE: MIFID II (Markets in Financial Instruments Directive II) 3rd January 2018
Background: MiFID was implemented to increase transparency surrounding trade in financial markets and now MIFID II regulates further down the chain of companies and individuals making financial transactions including IFA’s and anyone involved with “electronic communications” (including landline/mobile phone calls, SMS, and chat) that relate to the reception, transmission and execution of orders, irrespective of whether those communications result in a trade or not.
Some might think that the FCA declaration of ‘While having a digital, taped recording of a call is not obligatory for all’, is a get out of jail clause there is a very strong case for call recording which should be considered. As the FCA states ‘it is important to consider the benefits of using this method (call recording) in comparison to simply taking notes’.
The Problem with note taking.
- Consider how secure the storage of notes will be, who has access to the files and how tamper-proof are those files? How could you be sure that if a problem comes to light those notes aren’t changed or even destroyed before the FCA Inspectors visit?
- Note taking requires a concerted effort and uses valuable time. It often requires a pause to set up and find the relevant documents and files etc.
- Note taking is open to interpretation and can lead to expensive, time consuming disputes.
- Note taking involves time wasting activities like typing up the notes, filing and physical storage space costs (notes will have to be kept securely for 5-7 years)
- You may well only entrust certain employees to take notes to avoid human error and what if that person(s) is off work or leaves?
- In the final analysis, the FCA Inspector may rule your notes to not be adequate or thorough enough and therefore don’t prove best practice.