The Financial Conduct Authority (FCA) is an independent regulatory body that oversees over 56,000 financial services firm and financial markets in the United Kingdom, and the prudential regulator for over 24,000 of those firms. It establishes and enforces various recordkeeping rules and standards – including text message archiving and voice call recording – thatfirms must comply with and can levy fines and penaltiesonfirms whichwould fail to do so.
While the FCA has always been clear that firms must have a full and accurate record of all transactions that resulted into the trade – including mobile conversations that are intended to result in a trade – firms are not required to actually record voice calls in every instance. In 2017, FCA signed a final ruling regarding call recording under the newly-implemented Markets in Financial Instruments Directive II (MiFID II). The regulator’s final rules, published in Policy Statement 17/14, provide financial firms under Article 3 of MiFID II with the option to either record conversations relating to transactions or take written notes.
However, sincemost financial activities are too complex in nature to be manually recorded, the only way for UK companies under the jurisdiction of FCA to comply with call archiving regulations to record voice calls is to deploy enterprise messaging solutions that can capture and retain trade-related voice calls, text messages, and other mobile content in real-time and in efficient manner.
With all that being said, here are the key sectors in the UK that should record voice calls in order to remain compliant with FCA call recording requirements.
The COBS 11.8obliges financial services institutions like investment houses, commercial and retail banks, and hedge fund managers to record all telephone conversations– including those from mobile devices – involvingclient orders for the equity, bond and derivatives markets and retain the files for a period of at least six months in a format that does not allow the original record to be altered or deleted.
Initially, the FCA planned to exempt voice calls on mobile devices and other handheld devices from this rule, but they decided later on to include these voice calls as well. With most financial services agents these days using their smartphones to conduct transactions with their customers, it is extremely crucial for firms to deploy an enterprise mobile archiving platform in order to ensure that all trade-related voice calls are kept, employees are regularly monitored, and an audit trail is maintained.
InsuranceandClaim Management Companies
Most UK insurance and protection companies are required by the FCA to record voice calls. Although not mandatory in the General Insurance sector, the Chapter 9 of the FCA Senior Management Arrangements, Systems and Control (SYSC) handbook – which contains high-level recordkeeping requirements – also applies to insurance companies that sell Payment Protection Insurance (PPI) in the UK. For those insurance businesses that sell financial products such as some mortgage and pension products,it is mandatory to record voice calls as per the FCA call archiving requirements.
In June 2018, FCA also announced their proposals for the Claims Management Companies (CMCs), which will need to be followed once the FCA has taken over as the CMC regulator on April 1, 2019.
Under the proposed rules, CMCs will be required to record and keep all customer calls for at least 12 months. They must also maintain records of the text message and email communications to ensure that they can be monitored and investigated for what FCA calls ‘aggressive’ sales methods.
In 2009, the FCA started regulating firms selling Connected Travel Insurance (CTI) – travel insurance that is sold in connection with a holiday. The FCA’s main aim is to protect customers and to ensure that companies are “treating customers fairly”. This means that companies should not mis-sell the policy to a customer or provide a policy that does not suit the customer’s needs.
In order to meet these expectations from the FCA, travel agencies should record voice calls using a reliable call archiving solution. By doing so, travel companies can prove to FCA that the customers are being treated fairly and being given the right information each time a sale transaction of such travel insurance contract takes place.
While the FCA is not directly responsible for regulating retailers in the UK, their mandate to record voice calls apply to those retailers that sell PPI or offer installment credit financing to their customers.
There are certain conditions that retailers offering installment credit can apply for to be exempted from the authorization of the FCA. If the retailer fails to meet those criteria, then they should record voice calls relating to any sale transactions where the customer opted to installment credit financing.
The FCA has also been enforcing more stringent rules regarding the selling of PPI policies, so it’s crucial for retailers to have the right call archiving and monitoring system in place to ensure that all sale transactions that involves PPI will be recorded in accordance with the requirements of the FCA.
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