To Record or Not to Record: Brexit Causing Confusion Around Call Recording Regulation

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To Record or Not to Record: Brexit Causing Confusion Around Call Recording Regulation

July 18, 2017

Regulatory agencies are constantly revising rules around business procedure and policy, especially when it comes to compliance and meeting and ensuring safety and security standards.  Nowhere are compliance issues surrounding transparency and data available under more scrutiny than in the financial sector. 

In the UK, the Financial Conduct Authority (FCA) has set a January 2018 date for its MiFID II regulations to take effect, essentially placing more stringent call recording rules on any interaction related to the sale, marketing or promotion of financial instruments.

It appears now that “recording” may also include written notes, but that all written records and recording must include the date, time, and location of the meeting; the identities of attendees; who initiated the meeting; and client order information such as price, time of the order, type of order, and volume.

In the UK, however, there’s another variable that is causing confusion, not so much around the MiFID II mandate, but about its applicability to institutions in the UK in the wake of Brexit.  An April, 2017 study by Opinion Matters, commissioned by Aeriandi, clearly indicates UK financial services firms are entirely uncertain as to how MiFID II regulation will impact them.

A quarter of the IT decision makers and Risk/Compliance managers from UK financial services businesses surveyed believe their businesses will be exempt from the MiFID II regulations due to Brexit. Nearly three-quarters of those are from large enterprises with more than 100,000 employees.  An additional 14 percent have no idea how Brexit will impact their need to comply with MiFID II, and 22 percent understand the requirements, but not how they may apply to their businesses.

With only a few months until MiFID II takes effect, only 36 percent of respondents have policies and procedures in place to ensure compliance, and only 34 percent have started to actually implement policies, procedures, and system changes.  Another 30 percent supposedly have allocated budget, but have yet to start any implementation due to uncertainty about requirements.  And, alarmingly, a mere one in ten has communicated with partners and suppliers about their MiFID II preparations.

What it means is a majority of financial institutions in the UK are unprepared for the new call recording requirements, simply because of the complications stemming from Brexit.  It’s clear, though, based on comments from the FCA, that MiFID II will take effect as planned, and also that its implementation and, consequently, its impact, is going to be skewed for the foreseeable future.  While providers and suppliers can provide as much information as possible, it looks as though compliance around call recording policy is going to get caught in London’s fog for some time.

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