More Reasons To Record Financial Advisor Calls

More Reasons To Record Financial Advisor Calls

3 more reasons why Financial Advisors should be recording telephone calls

As someone involved in the call recording industry for many years, I find it difficult to believe that the Insurance Ombudsman stressed the importance of firms recording critical telephone transactions some 15 years ago.

Back in 2002 after numerous complaints, the Ombudsman stated ‘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’.

Fast forward to 2018 and the Financial Conduct Authority has launched a consultation on plans to give more small businesses access to the Financial Ombudsman Service. Currently, only individual consumers and approximately 5.5 million of the smallest type of business can access the Ombudsman if they have a dispute with a financial services firm. Approximately 160,000 businesses that cannot access the Ombudsman would need to take a financial firm to court and the FCA believes 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.’

It’s likely that an increasing number of businesses and charities will be taking their disputes to the Ombudsman and whilst we can’t second guess how he will deal with those complaints if they are related to telephone conversations it seems sensible that a recorded telephone conversation will be a highly influential factor in resolving any dispute

The importance of recording telephone conversations is further strengthened by the compliance regulations of the FSA and FCA introduced over the last 10 years with the introduction of MiFID1 and in January 2018 MiFID2 requiring all telephone call related financial transactions to be recorded be in by landline, mobile or SMS.

MiFID1 initially dealt with financial market abuse and a lack of transparency in financial dealings and was aimed specifically at regulating only stock brokers, traders, derivatives dealers and the like. MiFID2 regulates anyone involved with “electronic communications” that relate to the reception, transmission and execution of orders. And anyone means even your local Independent Financial Advisor!

MiFIDII spells out the compliance requirement for regulated firms to take notes of any financial transaction whether it results in a trade or not. As many transactions are conducted over the phone there should be a means of recording these. The options are either writing copious notes which is fraught with difficulty (Link) during the phone call or recording the 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 in comparison to simply taking notes’.

You might wonder why then, with all these recommendations, regulations, and fines for non-compliance that thousands of IFAs, Brokers, Financial Planners, Wealth Managers, Financial Planning Consultants and the like still aren’t recording their telephone calls? Could it be down to lack of information, are they simply ignoring sound advice from regulatory and advisory bodies or is it a cost restriction?

If you are a financial advisor, or even if you are a customer of a financial advisor seeking a means to ensure that your important telephone conversations can’t be disputed please call us on 0203 4881498 or e-mail sales@vidicodeuk.co.uk where we can advise on a range of solutions from only £100.

Important links

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/18/july-said-that.htm

https://www.fca.org.uk/news/press-releases/financial-conduct-authority-consults-widening-access-financial-ombudsman-service-small-businesses

https://www.fca.org.uk/markets/mifid-ii

2019-05-30T18:51:41+00:00