The regulator had proposed extending the requirement of recording conversations to all advisers in a bid to quickly resolve ombudsman complaints.
But the idea sparked a number of concerns among Financial Planners and advisers, with some fearing the impact on their firm’s reputation and the extra regulatory burden.
The Association of Professional Financial Advisers was unhappy with the proposal, saying it will be particularly costly for small firms.
Following such criticism, the FCA today announced it would drop the idea.
A statement read: “Having considered consultation feedback in the context of MiFID requirements, the FCA agrees that the business model of many of these firms means that a full taping obligation may not always be appropriate.
“The FCA will allow retail financial advisers to comply with the ‘at least analogous’ requirement by either taping all relevant phone conversations or taking a written note of those conversations.”
The FCA made the statement as part of publication of near final rules on the implementation of the Markets in Financial Instruments Directive (MiFID) II. These include changes to the trading of financial instruments including issues affecting trading venues, transparency of trading and algorithmic and high frequency trading.
Firms impacted by the changes to the activities and instruments covered by MiFID II should now apply for authorisation or for variations of permission, or risk being unable to operate in the UK market after 3 January 2018, when MiFID II takes effect, the FCA said.
In June, the FCA plans to finalise the MiFID II rules in a further policy statement. This will cover remaining issues which include conduct of business, perimeter guidance, and client asset protections.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said: “MiFID II introduces substantial and wide ranging measures designed to improve investor protection and promote market integrity.
“Some firms will need to be authorised for the first time, others will need to vary their current permissions.
“It is critical that those firms submit their applications now. The FCA does not expect to make any significant changes to these rules before they are finalised in June this year, and therefore firms should not delay.”
The FCA also published today a fifth MiFID II Consultation Paper, which covers new rules for Occupational Pension Scheme firms, and the extension of the FCA powers within the Enforcement Guide and Decision Procedures and Penalties Manual.