Why Recording Calls Matters: Understanding the Financial Ombudsman’s Requirements
The Financial Ombudsman Service (FOS) operates as an independent body to resolve individual financial and insurance disputes efficiently and with minimum formality and cost.
The existing system works effectively for individual customer complaints about specific issues but may face challenges when dealing with many complaints about the same problem.
In response to these challenges, the Financial Conduct Authority has issued a Call for Input to modernise the Financial Ombudsman’s role and strengthen collaboration with the FCA as highlighted in Chancellor Rachel Reeves’s November 2024 Mansion House Speech.
Why Call Recording is essential for insurance advisors
The history of call recording requirements reflects the growing need for accurate record-keeping in financial services:
In 2002 the Insurance Ombudsman first highlighted the importance of effective dispute resolution, particularly for small businesses struggling to achieve fair outcomes without realistic court options.
In 2018 the Financial Conduct Authority (FCA) broadened access to the Financial Ombudsman Service, which previously only served individual consumers and about 5.5 million of the smallest businesses. This expansion recognised that many smaller businesses needed better options for resolving disputes than taking costly court action.
The Financial Conduct Authority (FCA) rules on call recording.
The FCA strengthened the importance of recording telephone conversations with the introduction of MiFID1. In January 2018, MiFID2 required all telephone call-related financial transactions to be captured by landline, mobile or SMS.
MiFID1 initially dealt with financial market abuse and a lack of transparency in financial dealings and is explicitly aimed at regulating only stockbrokers, traders, derivatives dealers and the like. MiFID2 controls anyone involved with “electronic communications” related to the reception, transmission and execution of orders. This includes Independent Financial Advisors (IFAs)!
MiFIDII spells out the compliance requirement for regulated firms to take notes of any financial transaction, whether it results in a trade or not.
Current Requirements for Independent Financial Advisors (IFAs)
Under today’s regulations, financial advisors have two main options:
✔ Record all telephone calls related to financial transactions
x Maintain detailed written records of phone conversations
The FCA states, ‘ While having a digital, taped recording of a call is not obligatory for all; it is important to consider the benefits of using this method compared to simply taking notes.
Why Digital Recording Is Becoming the Preferred Choice
✔ Provides clear evidence of conversations
✔ Helps resolve disputes more efficiently
✔ Offers protection for both advisors and clients
✔ Ensures accurate record-keeping
✔ Supports compliance with regulatory requirements (FCA, PCI, GDPR)
Important compliance notice: Some standard call recording methods for phone calls, video meetings, and digital messaging may not satisfy FCA regulatory requirements. Financial advisors seeking cost-effective, fully compliant recording solutions can visit our for professional guidance or contact our knowledgeable team:
Phone: +44 203 488 1498
Email: gemma@vidicodeuk.co.uk
Important Links
2024 Modernising the Redress System
2024 Mortgage Solutions: Ombudsman Reform
2018 Widening access to Financial Ombudsman