MiFID II and Call Recoording

MRVS_MAC

Pan-European requirement to retain recorded calls

The scope of call recording is extended

All calls that can lead to a transaction must be recorded

Mobile phones must be recorded

Longer retention periods required – 5 years

Detect and record when calls are not retained

Mandatory to listen to a selection of recorded calls

Management must have greater focus on the recording processes

Markets in Financial Instruments Directive 2014/65/EU

The coming Markets in Financial Instruments Directive 2014/65/EU (MiFID II) aims to provide stronger investor protection and transparency for clients. MiFID II rules will come into effect from 3 January 2017. MiFID II requires recording of all telephone calls that are intended to result in a transaction. Thus anyone making a call in which they recommend products or aim to make a ‘transaction’, will have to record that call and store the recording for five years, ref. Article 16(7).

The addition of a Pan-European requirement to retain recorded calls, both mobile and fixed, represents a notable expansion of the current European policies. Currently, only a few countries, including the United Kingdom and Norway, require mobile phones to be recorded, and it is only Norway that require recording of all calls that are intended to result in a transaction.

No longer will bank policies that directs employees not to use their mobile phones for “client orders and transactions” be satisfactory. Regardless if the conversation is on a device provided by the bank or not, ref. Article 16(7). In most European countries, this means that solutions will need to be implemented for the recording of mobile calls. Touch Call Recording supports recording of mobile (and fixed) networks.

MiFID II also contains a clear requirement that management must have effective control over policies related to call recording. Furthermore, firms must monitor the recorded calls in order to ensure compliance with the regulatory requirements. The monitoring is specified as risk-based and proportional. Thus firms must start monitoring programs to listen to their recorded calls. Touch Call Recording supports monitoring and logging of monitoring.

Firms must also be able to detect when they do not record or retain calls, and investigate why the calls were not recorded or retained. Results from the investigation must also be kept for 5 years. So if you made 10 mobile calls, then you must make sure that you retained records of 10 mobile calls. This kind of end-to-end consistency check will become the new standard in compliance recording. Touch Call Recording already supports end-to-end consistency check and lists calls that are not recored.

UK

For UK MiFID II means an expansion of the current framework in Conduct of Business Sourcebook (COBS §11.8.5). MiFID II will require all “communications that are intended to lead to a transaction” to be recorded, rather than the previous, narrower mandate of “client orders and transactions”. This will substantially increase the scope of calls that must be recorded and retained. New firms will be required to record their calls. Among these are retail, independent financial advisors and boutique corporate broking firms. Thousands of businesses will have to record their calls and text messages. An additional 300,000 people must record their mobile phones calls. Furthermore the retention period will be increased from the current 180 days to 5 years.

Norway

The current legislation in Norway already requires recording of mobile and fixed calls that could lead to a transaction. Norwegian companies already inform the authorities (Finanstilsynet) of calls that have not been recorded. The main changes for Norway will be more management focus on call recording policies, monitoring of recorded calls, investigation why calls were not retained and to keep recordes of these investigations in 5 years.
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