The Financial Conduct Authority (FCA) has confirmed that Financial advisers will either have to record or take notes on any phone calls with clients that are “intended to result in a transaction being undertaken”,

In its latest Markets in Financial Instruments Directive II (MiFID II) policy statement, the regulator has allowed advice firms of all sizes to comply with its ‘at least analogous rule’, which would allow firms to take notes of a call rather than record it.

This, it said, follows feedback arguing that “no fair distinction can be drawn between a large and a small retail financial adviser”.

FCA confirms call-recording and note-taking rules for advisers

The FCA noted some respondents said phone recording rules would be in-proportionately expensive. It disagreed with these respondents, however, rejecting claims call-recording measures would be as costly as they suggested.

The regulator said:

• “The ability for retail financial advisers to choose between making a written record, or recording relevant conversations, should enable these firms to make cost-effective decisions while preserving an appropriate level of investor protection,”

It also confirmed firms should develop and maintain a consistent approach in their decision to tape or take a note of relevant conversations and said this rule was put in place to stop advisers “gaming” the system.

The FCA did note, however, that if a client were to contact an adviser on a non-recordable line, it would be unreasonable to expect an adviser to continue the conversation on a recorded line.

Note-Taking

With regard to its ‘at least analogous note’ rule, the FCA gave, as a minimum, five criteria it would expect advisers to meet when taking notes of a relevant phone call:

1. The date and time of the meeting
2. The location of the meeting
3. The identity of the attendees
4. The initiator of the meetings, and
5. Relevant information about the client order, including the price, volume, type of order and when it will be transmitted or executed.

As well as these five criteria, the FCA said advisers must also capture the main points of the conversation to provide a degree of consumer protection.

It explained:

• “This approach will ensure firms do not omit relevant details from the note, providing an accurate and contemporaneous record of the conversation.
• “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. In other words, anything communicated from either the client or the adviser that could influence the client’s decision should be captured.”

Good practice, the regulator added, would include firms sharing notes made of relevant phone calls with clients on a regular basis to ensure accuracy.