Financial advisers will be required to record telephone calls in future under FCA plans, released recently, in a bid to quickly resolve Ombudsman complaints. The proposal was contained in a third consultation paper on MiFID II.

Gemma Williams CFPTM Chartered MCSI, Director of Financial Planning at UNIQ, in Wales, had concerns about the proposals’ impact on the perception of her firm and other smaller Financial Planning practices.

Nicola Watts CFPTM Chartered MCSI, director of Jane Smith Financial Planning in Buckinghamshire, also told FPT recently she feared that it could create “completely the wrong image” for her business.

Ms Williams said: “The relationship with our clients is based on mutual trust and in providing a personal service. The use of recorded messages, which are so well associated with larger companies, some of whom have notable client advice wrong-doings in the past, will do nothing for the reputation of the Financial Planning.

“We don’t feel that the introduction of recorded calls will add a great deal and, if anything, could lead to client frustration. I would also question the usefulness of the legislation if we are not, at this stage, expected to record clients’ meetings where arguably there are more important discussions taking place on the very areas the regulators are trying to protect consumers.”

She said there were practical considerations as well about how the recordings will be notified to clients, made and saved.

She said: “This is likely to add additional cost to the business and how will this work with more portable communication devices such as advisers’ mobile phones?”

Uniq keeps thorough records of client conversations (emails, meeting notes, written correspondence) and can demonstrate a thorough audit trail of client activity, she said.

Ms Watts told FP Today: “I have no particular concerns about calls being recorded. After all, we’ve got nothing to hide. However, there are two main factors that I think need consideration.

“From the point of view of protecting our brand, I really worry that this sets completely the wrong image for us as a firm.

“The idea of recording calls smacks of large, impersonal companies dealing with huge numbers of clients and having to protect themselves from these people. This is certainly not the kind of image we want to be giving.

The regulator has proposed extending the requirement of telephone taping to advisers as part of plans for implementation of the revised Markets in Financial Instruments Directive.

The regulator said the change would be aimed at “providing benefits to both firms and their clients in resolving disputes in a quick and cost effective manner”.

The FCA report stated: "We propose to apply a taping regime to all Article 3 firms (Article 3 firms largely comprise of financial advisory firms and a smaller number of corporate finance boutiques).

"This is because based on information from the Financial Ombudsman Service the majority of complaints about investments centre on the conversations that happened when they are sold.

"We think taping conversations between firms and their clients is likely to be an effective way of advancing our consumer protection objective.

"However, we remain open, particularly for smaller financial advisers, to considering whether an alternative approach could help us to achieve a similar level of consumer protection in this area as taping but at a lower cost for firms."

MiFID II introduces for the first time an EU wide minimum harmonising requirement on firms to record telephone conversations and electronic communications when providing specific client order services that relate to the reception, transmission and execution of orders, or dealing on own account.