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FCA reveals taping requirements for advisers
The FCA has watered down its original proposals to require all advisers to record client calls.
But it said must either take notes or record telephone conversations and electronic communications “resulting in - or that are intended to result in – transactions”
The FCA has been consulting on the measures as part of how it will implement MiFID II when it takes effect in January.
MiFID II introduces, for the first time, an EU-wide harmonised requirement on firms
to record telephone conversations and electronic communications relating to “transactions concluded when dealing on own account and when providing client order services that relate to the reception, transmission and execution of orders”. This will replace the FCA’s domestic taping regime that has been in place since 2009.
After listening to the concerns of advice firms, which complained about cost, among other problems, of taping all calls and keeping these logged, the FCA has permitted companies to make notes if they don’t record conversations.
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The report stated: “We will not apply a requirement for recording phone conversations and electronic communication to all investment services and activities carried.
“We have also decided that where Article 3 firms decide to take a note rather than record a telephone conversation we expect the note to include key details of any orders taken and the key substance of the main points of the conversation.
“Taking into account proportionality concerns, and feedback that no fair distinction can be drawn between a large and a small RFA, we will allow Article 3 RFAs, irrespective of size, to comply with the ‘at least analogous’ requirement by either taping all relevant conversations or taking a written note of those relevant conversations.
“As stated in PS17/5, firms should develop and take a consistent approach in their decision to tape or
take a note of relevant conversations.
“This is to ensure that the system could not be gamed by individual advisers or in particular situations.
“In exceptional and unplanned situations where a client contacts an adviser on a non-recordable line and it would not be reasonably practical for the adviser to continue the conversation on a recorded line, a note could instead be taken.
“The rule would not, however, allow a call-by-call choice on whether to record or take a note of these conversations. Further detail on which conversations are in scope of this requirement can be found at the end of this chapter.”
However, with regards to note taking, the FCA said an analogous note taken of a relevant telephone conversation must include at least these details as a minimum:
- the date and time of the meeting
- the location of the meeting
- the identity of the attendees
- the initiator of the meetings
- relevant information about the client order including the price, volume, type of order and when it shall be transmitted or executed.