On the backdrop of increased work from home and other alternative work arrangements, FCA now requires firms to record all telephone conversations and other electronic communications such as WhatsApp communication. The new requirement comes as part of a series of announcements given by the FCA to firms on the steps they must take on account of the ongoing working from home in the current circumstances and FCA investigations and actions against many firms’ widespread use of WhatsApp and non-monitored mobile communication.
Risks due to reduced monitoring
The Covid-19 pandemic has brought in major changes in the way regulated businesses are conducting their work and trades, due to changes in technology and communication patterns as well as with the increase in remote working. Some of these changes are long lasting and hence FCA expects firms to be in compliance with recording requirements, as well as monitoring for market abuse.
FCA has noticed heightened risks of misconduct and the growing use of WhatsApp after home working and remote working have become more common at the pandemic’s onset. It is highlighted that the increased use of unmonitored or encrypted communications apps such as WhatsApp for the sharing of potentially sensitive information related to work. Firms were found and sanctioned for not being able to effectively monitor communications using these channels. Continued use of WhatsApp regulated entities presents significant challenges and compliance risks. Firms must make sure that the communications done through these mobile communication and social media channels are auditable and can be easily recorded.
At the same time, FCA has also acted against individuals and firms for misconduct regarding the use of WhatsApp and other communication platforms for arranging deals and providing investment advice.
FCA highlights the widespread use of WhatsApp to transmit lists of trades and other ‘trading signals’ as well as using this channel for providing other investment recommendations to clients. Such WhatsApp communication must be recorded and monitored.
The FCA views these acts as serious violations of existing regulations and sought orders preventing such individuals from carrying out such misconducts in the future. Firms need to be proactive and find ways to record, archive and monitor all mobile communication in line with their policies and regulatory obligations.
What communications are to be recorded?
There is no specific restriction on the technologies or apps that firms can use for communications. However, the FCA highlights that in all cases, firms must understand that the recording obligations are still in place. Firms must have effective policies, controls and oversight to ensure that these requirements are met and that there is supervision to detect and deter market abuse. Such monitoring and enforcement are expected by the FCA, and should be met for WhatsApp or other mobile channels permitted or provided by the firm for business communication purposes.
The regulations make it mandatory for firms to record conversations and communications made with, sent from, received on, equipment provided or permitted to be used for business purposes. Firms must take all steps to make sure that they record telephone conversations and keep copies of electronic communications of activities falling within the scope of the recording rules. It is also advised that firms must identify communications intended to lead to these activities being performed or where there is a reasonable prospect of such activities being performed. It may also involve internal communications and conversations depending on the circumstances.
What firms must do?
Firms must have robust and up-to-date policies in place regarding the recording of business conversations and if required must demonstrate to FCA that their policies, procedures and management oversight meet the recording rules. The policies must identify which telephone conversations and electronic communications are subject to recording requirements. Firms using WhatsApp must record this channel.
There must also be robust protocols concerning procedures to follow when breaches are identified.
When there is a new policy or an amendment to the existing policy, these should be clearly set out, written, documented and signed off under appropriate governance arrangements.
At this time when remote working is on the rise, firms must assess policies and controls for the use of privately owned devices to connect to their organizational networks and access work-related systems and machines and potentially sensitive or confidential data to make sure that they provide sufficient scope for effective recording.
When new policies are introduced, existing policies are amended or new technologies are brought in, firms must also provide adequate training to the staff covering the use of the new technology.
If a firm decides to shut down a call center and allows its employees to work from a remote location or work from home, then it should establish appropriate systems and controls in place to maintain appropriate records including call recording of business communication. When employees are working outside their offices, FCA expects firms to do everything they could to prevent market abuse risks by enhanced monitoring or retrospective reviews.
In view of the new advice from FCA, business firms must create robust policies and use new technology to do call recording and archiving of all electronic communication including conversation using messaging apps like WhatsApp and other mobile communication and social media platforms.
About TeleMessage
TeleMessage captures and retains mobile content, including mobile SMS messages, voice calls, and WeChat conversations from corporate or BYOD mobile phones to ensure compliance with various data protection regulations. The messages are securely and reliably retained within TeleMessage servers or forwarded to your choice archiving data storage vendor.
Our mobile archiving products securely record content from mobile carriers and mobile devices for various ownership models (BYOD, CYOD, and employer-issued). With our multiple archiving solutions, you can always find the right tools or blend for your requirements:
TeleMessage offers cross-carrier and international mobile text & calls archiving for corporate and BYOD phones. Visit our website at www.telemessage.com to learn more about our mobile archiving products.
