Last March the FSA published rules which required some firms to tape some telephone calls. This was in Policy Statement 08/1 ‘Telephone Recording: recording of voice conversations’. The aim of the rules was to tackle market abuse by improving our ability to deter and enforce against it. The rules will come into force in March 2009.
A number of technology providers have been targetting financial advisers and quoted that "IFA's" were within the scope of the proposals and would be required to record their calls. This is incorrect.
What types of firm are outside the scope of the rules?
The FSA rules exclude:
- retail financial advisers,
- insurance brokers,
- mortgage brokers,
- solicitors,
- estate agents and
- those receiving and executing loans.
What types of product are outside the scope of the rules?
The rules do not apply to:
- insurance products;
- dealing in the units of most collective investment schemes;
- corporate treasury activities; and
- corporate finance business.
What types of product are included?
The rules apply to products included in the market abuse regime. These are qualifying investments (include shares, bonds, options and futures) traded on a prescribed market (or investments that are related to these investments).
(For example Mmarkets are operated by EDX London Ltd, ICE Futures Europe, LIFFE, London Stock Exchange plc, PLUS markets plc, SWX Europe Limited, The London Metal Exchange and other EEA regulated markets.)
Are firms required to tape internal phone calls?
No. This is not necessary and is not part of the FSA rules. The FSA only expects calls with clients to be recorded. People in back office functions are not captured by the rules, on the basis that they would not normally make relevant communications when doing their job.
What type of call needs to be recorded?
Relevant firms need to record calls which:
- conclude an agreement with any client or with another regulated firm on behalf of a client; or
- are conducted with a professional client or eligible counterparty with a view to concluding an agreement.
