Advisers brand Mifid call recording 'step too far' Advisers brand Mifid call recording 'step too far'

08 Feb 2017

The incoming Markets in Financial Instruments Directive II (Mifid II) has indicated advisers must record all client phone conversations.

Tom Hegarty, managing director of the New Model Business Academy (NMBA), called Mifid II, which is set to be implemented on 3 January 2018, the "next industry regulation shake up", and said advisers had expressed deep concern about the details of what the new rules might mean.

Mr Hegarty said: "It is not clear yet how much of the proposed changes will be applied and imposed on our now ‘Brexit’ nation, but the part of Mifid II most reported on is the potential call recording requirement. 

"It is an unfortunate fact of our industry that almost no adviser is safe from the possibility of a client complaint and the experts at EU HQ feel the recording of all client telephone conversations will provide necessary protection against the innumerable future complaints of the advising population."

A survey carried out among members of NMBA revealed 85 per cent - out of 332 respondents to the poll - agreed this was a step too far. 

Mr Hegarty commented: "We had our largest response to a survey yet, with 332 of our NMBA members responding. This overwhelming response tells us that this is an emotive issue and one which advisers feel very strongly about."

According to Mr Hegarty, although once implemented it is likely the requirement would eventually become forgotten about, as it is unnoticeable, the problem goes far deeper.
He quoted responses from some of the NMBA members. Comments included:

“If you do the job right, if you genuinely have clients’ interests at heart, the need to recall every conversation doesn’t exist. You’ll never get a true conversation either – too guarded. It would, in my humble opinion, be madness to encourage this.”
“It should not be necessary and would restrict the extent to which the IFA could offer helpful comments which could later be misconstrued as “advice” by litigious individual encouraged by lawyers.”
That said, some members do already record calls. One member commented: “We have been recording calls both in and out since December 2010. It costs us just £1 plus VAT per month for each telephone number, with no hardware at our end.

"We save all our telephone calls (which are attached to emails) with our ISP, which costs us an extra £1.00 plus VAT per Gigabyte per month. Therefore the cost of recording/storage is extremely low and well worth the extra protection it offers us.”

Mr Hegarty added: "Clearly, a large proportion of NMBA members are concerned that call recording would undermine the trust that clients have for their adviser and are naturally reluctant to add another level of scrutiny and compliance.

"However, the costs of implementing this are low and it would provide an additional level of protection for both clients and advisers.

"If calls had to be compliance checked and audited, that would be a completely different story and almost definitely a step too far for most, although some advisers are happy to implement as much protection against themselves and their business as possible."

Whether call recording becomes a requirement or merely a recommendation is yet to be seen but Mr Hegarty pledged to continue "working closely with advisers to ensure that there is minimal disruption and cost if they do choose to record their calls and help allay concerns around trust and consumer understanding around this ‘Big Brother’ approach."

In 2016, FTAdviser raised concerns that, under Mifid II's requirement for all investment advice given over the phone to be recorded, all advisers' client conversations may have to be recorded.

At the time, Neil McCarthy, sales and marketing director for Lifequote, warned of the investment rules under Mifid II being replicated elsewhere in financial advice, including mortgage, pension and protection advice.

Earlier this year, the Association of Professional Financial Advisers called on the FCA to drop the excessive regulatory requirements as outlined by the European Union directive.

As seen in FT Adviser.

 


Testimonials

“Extremely satisfied with SimplyBiz Services”

Kevin Hopwood
Hopwood Ash Ltd

Read More

Latest News

Ken Davy: "Dump those bad apples and embrace SM&CR"

August 10, 2017

It only takes a few rotten apples to add some very big numbers to every good adviser’s FSCS bill, so anything that will help us rid our sector of them is to be welcomed.

Read more >

Ken Davy: "Taking a weather check on pension freedoms"

August 02, 2017

BBC weatherman Michael Fish famously failed to forecast the hurricane in October 1987, which overnight destroyed 15m trees and turned the town of Sevenoaks into just one oak.

Read more >

Ken Davy: Revised managers' regime will uncover 'reckless and criminal' firms

July 28, 2017

The Financial Conduct Authority’s extension of the senior managers’ regime will help weed out “reckless and criminal firms”, financial adviser support firm SimplyBiz Group says.

Read more >

Ken Davy: "Good financial advice means more holiday cash"

July 26, 2017

As you prepare for a well-earned summer break, I urge you to reflect upon some detailed research by ILC-UK into the value of financial advice, which has revealed that even those consumers who are just getting by can be more than £40,000 better off if they receive advice.

Read more >