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The FCA plans to make advisers record sales calls: what you need to know

Dimitriya Paunova


Sales Regulations

You may have read that one of the FCA’s proposals under MiFIDII is to make advisers record phone calls with contacts – including business development calls.

Last month, the Association for Professional Financial Advisers (APFA) urged the regulator to scrap these plans, as reported in Financial Planning Today.

With the proposals still due to go ahead at present, we look at the MiFIDII requirements and the implications for Sales teams.

What will the MiFIDII rules mean?

Current regulations require certain firms to record client and sales calls. MiFID II proposes extending the existing recording requirement to all ‘Article 3’ firms, which brings into scope advice firms and corporate finance boutiques.

Firms will have to record any telephone conversations and electronic communications that relate to ‘the reception, transmission and execution of orders, or dealing on own account’.

The proposals make compliant record-keeping essential, as the recordings have to be kept for at least five years.

What will the impact be on advisers?

The advice sector isn’t happy about the requirements, as this article in Money Marketing highlights.

The cost of recording is one of the biggest issues, and will be a particular problem for smaller firms, where the cost of making and keeping these recordings may be prohibitive.

Will recording calls prevent mis-selling complaints?

In its consultation paper on the plans, the regulator quotes data from the Ombudsman, which shows that most complaints about investments stem from conversations where the investment was sold.

By insisting these calls are taped, the regulator hopes that ‘a clear audit trail of the intention and understanding of the parties leading up to the conclusion of a transaction’ will be created.

It argues that this will help it to investigate any mis-selling claims.

However, critics have questioned this. Recordings will need to be kept for five years, but complaints to the Financial Ombudsman often happen much further down the line. Will the recordings help deal with complaints relating to calls going back more than five years?

What are the cost implications?

The regulator acknowledges that advisers will incur costs in terms of recording equipment and ongoing storage of call information.

What happens next?

Firms were able to submit comments on the consultation paper until last month. The Authority is now collating these and will doubtless provide an update on its plans in due course.

For now – there is nothing for Sales teams and advisers to do but wait for the final regulations.

We will be keeping an eye on the regulator’s website, so sign up to our Sales Blog to make sure you’re up to date with the latest developments.

Currently, phone calls fall outside the scope of the FCA’s stringent rules as they’re classed as ‘real time’ financial promotions and regulated differently to ‘non-real time’ promotions.

It’s a common misconception that social media also falls outside of these rules, when in fact it’s a non-real time’ promotion and needs to me the same compliance requirements as any other marketing material or financial promotion.

With business development teams increasingly being encouraged to do ‘social selling’, our 10 best practices for compliant social media gives a good grounding on the dos and don’ts. You can read a copy here.

10 best practices for financial firms and advisors using Twitter



Topics: Sales

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