UK advisers must record calls under new FCA Mifid II rules

Added 29th September 2016

Financial advisers in the UK may be required to record phone calls to clients under the Financial Conduct Authority’s (FCA) proposals regarding Mifid II, which also looks at extending the RDR commission ban for portfolio managers.

UK advisers must record calls under new FCA Mifid II rules

In a consultation paper published on Thursday, the regulator said it was considering extending recording requirements, due to come into force in January 2018 as part of the Mifid II regulations, to include financial advisers.

If implemented, the recordings would be held for at least five years, although the FCA said it will consider a different approach for smaller firms.

“We think taping conversations between firms and their clients is likely to be an effective way of advancing our consumer protection objective,” said the FCA.

The recommendation is based on data from the Financial Ombudsman Service (Fos), the UK’s financial services complaints body, which found that the majority of complaints about investments centre on the conversations when investments are sold.

Chris Hannant, director general of the Association of Professional Financial Advisers (Apfa), said the FCA proposals may not require advisers to record every phone conversation with a client as the rule was originally unveiled under Mifid II to help with client audits.

“If advisers are not giving advice on the phone then I don’t believe that they should need to record it because it’s [Mifid II] about the process of giving advice,” he told International Adviser.

Inducement ban extended

The consultation paper also looks at extending Mifid II’s inducement ban for firms giving investment advice and portfolio management service to retail clients.

Under the proposals, the ban would be applied to restricted advice in addition to independent advice as well as enforcing a ban on rebating commission to retail clients.

Rules implemented in the Retail Distribution Review (RDR) in 2013 will also be amended to apply the inducements ban to the “business of providing advice” rather than only to commission provided in giving a personal recommendation.

Professional clients

The FCA said it was also considering whether to impose the rebating commission ban on portfolio managers dealing with “professional clients”, adding that it will make its decision following the consultation.

“We have since considered whether to extend this rebating ban to portfolio managers when dealing with professional clients, as it may be more practical for firms and will help to prevent bias in investment decisions.

“However, we have decided to seek views first before finalising our policy in this regard,” wrote the regulator.

The consultation closes on 4 January 2017 with a further consultation expected to be published before the end of this year.

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About Author

Monira Matin

Senior Reporter

Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.



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