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Advisers need FOS case to 'set the bar' on Mifid call recording

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Advisers need FOS case to 'set the bar' on Mifid call recording

Advisers will require a Financial Ombudsman Service (FOS) decision to 'set the bar' for new call recording requirements due to be introduced by the Financial Conduct Authority (FCA), according to one compliance firm. 

In a policy statement published yesterday the FCA set out how it planned to introduce call recording to advice firms in line with the EU's Markets in Financial Instruments Directive (Mifid II) which is due to come into force at the start of next year. 

The FCA confirmed its position that financial advisers would not have to tape face-to-face sessions, but would have to either tape telephone calls or provide an “analogous” written note of them. 

Mifid II rules require the date and time of the meeting, its location, initiator, attendees and any relevant information about the client order, such as price, volume and type of order and when it will be executed. 

However, the FCA suggested firms should go beyond this.

'We expect the note to capture any substantive points raised in the relevant conversation that provide material context and colour to the decision taken by the client,' it said.

'In other words, anything communicated from either the client or the adviser that could influence the client’s decision should be captured.'

Vince Harvey, director of Compliance Cubed, said this will be interpreted differently by firms and would need further clarity from the FOS or the FCA itself

'The regulator is expecting more than just the hard facts, and is looking for evidence of the motivation behind a client's decision,' he said. 

'It will be a while before it settles down and firms have a clear idea of what they think they are going to do. There will be a challenge through the FOS, whereby they can point to a decision and say "well the FOS said this", or it will need a thematic review. 

'Until that point, firms will record the information in the same way they conduct fact finds currently, with everyone doing it differently, until the bar is set.' 

The FCA also said calls would only need to be recorded when advisers talk to clients about making a transaction. 

Read the FCA's full policy statement here

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