In 2002 after numerous complaints, the Insurance Ombudsman stated, ‘It is important for everyone, including financial advisors and financial services firms, that there is an effective dispute resolution mechanism for businesses. Our evidence suggests some small businesses find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them.’
In 2018 the Financial Conduct Authority launched a consultation on plans to give more small businesses access to the Financial Ombudsman Service. Only individual consumers and approximately 5.5 million of the smallest type of business could access the Ombudsman if they had a dispute with a financial services firm.
Roughly 160,000 companies that couldn’t access the Ombudsman would need to take a financial firm to court, and the FCA believed that many smaller businesses within this group struggle to do this.
Upon launching the 12-week consultation in January 2018, Andrew Bailey, Chief Executive at the FCA, said, ‘It is important for everyone, including financial services firms, that there is an effective dispute resolution mechanism for businesses. Our evidence suggests some small businesses currently find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them. We have considered what could be done within our powers and the remit of the Financial Ombudsman Service to improve this situation and are proposing to expand access to the Ombudsman.’
An increasing number of businesses and charities will likely take their disputes to the Ombudsman. If complaints are related to telephone conversations, a recorded telephone conversation will be highly influential in resolving any dispute.
The Financial Conduct Authority (FCA) rules on call recording.
The FCA further 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 stock brokers, 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. This leaves IFAs with two options; either record their telephone calls or make sure they take accurate notes during a phone call.
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.
If you are a financial advisor seeking a cost-effective way to comply with FCA call recording regulations, our friendly team members are here to help.
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