How to avoid falling foul of the new rules
MiFiD II is a wide-reaching piece of European legislation which comes into effect for all European Union member states on 3rd January 2018.
The legislation covers several areas including costs disclosure, suitability, reporting and record keeping.
There has been a lot of confusion and misunderstanding on what, exactly, firms must do from 3rd January.
In this post, we want to highlight the new requirement for advisers to record client calls and meetings.
The new rule is that firms MUST record any telephone call or face to face meeting with a client that provides advice that leads to or is intended to lead to an investment transaction, even if a transaction doesn’t end up taking place.
Not all calls and meetings will be in scope but in practice firms will probably wish to record all client discussions to avoid the risk of non-compliance.
In scope telephone calls MUST be recorded in digital format whereas face to face meetings can be recorded in either written or digital format.
In the case of face to face advice meetings the firm must follow the SAME method of recording for every meeting by every member of staff. This is referred to in the guidance as ‘at least analogous’.
For example, if a firm decides to record face to face meetings in video/audio format it MUST do so for all such meetings with every client. If the approach is a written note then that must be done for every meeting.
A meeting room video recording system, for example, is an easy, unobtrusive and secure way of meeting this need.
Firms need to avoid ‘Swivel chair compliance’ i.e. the use of multiple, disparate solutions to meet compliance obligations.
This means that it IS NOT acceptable for firms to permit staff to use different call recording or video conferencing system. Firms need to us one enterprise wide solution that all staff use in the same way.
Data from notes, calls or video meetings must be stored centrally and be subject to a clear retention policy which can’t be less than 5 years, and be easily searchable and available for compliance teams.
Firms must regularly carry out spot checks and audits of records, whether written or audio/video, to ensure clients’ best interests are being served. This means firms need an oversight policy and means of grading such records against the rules.
MiFiD II will come into effect on 3rd January so firms MUST TAKE A STRATEGIC ENTERPRISE WIDE APPROACH to the selection, deployment and use of communications technology.
Finsol Systems are experts in the deployment of communications and digital collaboration systems for financial services firms.
Why not join us online or in person at 12pm on 2nd November for our next SEEING & HEARING IS BELIEVING live demo of the Dolby Blue Jeans video conferencing technology. We’ll show you how easy you can comply with MiFiD II’s meeting recording requirements, while also serving your clients better.
Book your place now by clicking here.