Call recording was one of many obligations that arrived with MiFID II in January 2018. We wrote about this topic at the time and you can read previous articles here and the summary at the end of this article.
The FCA has received a number of questions about what firms should do if they have difficulties meeting the call recording requirements when staff are working from home or from alternative sites. Their position is that, during this period, firms should continue to record calls. However, the FCA accepts that there could be some scenarios where this is temporarily not possible.
Firms are expected to take reasonable steps, including working with their telecom provider to find solutions that enable them to continue to fulfil all their call recording obligations. If no solution can be found, the FCA expects firms to consider what steps they could take to mitigate resulting risks. This could include enhanced monitoring or retrospective review once the situation has been resolved.
However, firms should notify the FCA if, for any reason, they are unable to continue to meet the call recording requirements.
Summary of recording requirements
Firms operating from an establishment (including a branch) maintained by the firm in the United Kingdom, are obliged to take all reasonable steps to record telephone calls and keep a copy of any electronic communications that relate to any of the following activities, in investments that are financial instruments:
(a) arranging (bringing about) deals in investments;
(b) dealing in investments as agent;
(c) dealing in investments as principal;
(d) managing investments;
(Note: there are a few other relevant activities – the above list includes activities likely to be applicable to an adviser firm. Refer to SYSC10A for full details of the call recording rules.)
The telephone conversations and electronic communications referred to above include those that are intended to result in the performance of the listed activities, even if those conversations or communications do not in fact result in the performance of such activities.
Exemption for Article 3 Exempt firms
A MiFID optional exemption firm that provides services solely or mainly to retail clients is not required to record telephone conversations, provided that calls that should be subject to the recording requirement are documented in a written file note which contains all relevant information, including at least the following:
- date and time of the conversation;
- identity of the individual participants in the conversation;
- initiator of the conversation; and
- relevant information about the client order, including the price, volume, type of order and when it will be transmitted or executed.