Financial advisers will be required to record telephone calls in future under FCA plans, released yesterday, in a bid to quickly resolve Ombudsman complaints. The proposal was contained in a third consultation paper on MiFID II.
Nicola Watts CFPTM Chartered MCSI, director of Jane Smith Financial Planning in Buckinghamshire, foresees problems with the proposals.
Having to record all calls will result in extra costs and may damage her firm’s brand, she believes.
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”.
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.
"This is about a relationship of mutual trust and recording calls doesn’t fit with this at all.”
She said: “We keep a full and detailed contact history for each and every client, retaining all e-mail communications and notes from all calls with clients.
“However, to have to record all calls is going to be another expense we are going to have to contend with. We also need to consider the practicalities of integrating this with our existing systems.”
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.