OPAL Group's Matt Oldham discusses what advisers need to know about client call recording given the Financial Conduct Authority's recent clarification on the rules.
The FCA has clarified its position on which firms need to routinely record all conversations with their clients.
Existing rules already require firms whose business involves executing trading orders for clients or trading on their own account to record all their calls and the FCA had been considering rolling this out to cover all retail financial advisers which are classed as investment firms.
Following a consultation on these plans it has now backed away from requiring all advice firms to make recordings of their calls, saying this may be disproportionate for smaller firms.
However, we believe it would be a mistake for firms simply to look at what they have to do rather than what they could do.
The best businesses know how to use data in every format and work out how to get value from it.
1. Interpreting regulation
FCA policy statement PS 17/5 says "we will propose that these firms, irrespective of size, can comply with the ‘at least analogous' requirement by either taping all relevant conversations or taking a written note of all relevant conversations."
This means firms can now decide for themselves whether to make an electronic recording of calls or to allow advisers to make detailed written notes of a conversation at the time of the call.
However, the decision to record calls has to be made by the firm as a general policy and advisers are not allowed to make the decision on a case by case basis.
So does this take call recording off the table and what does it mean for advisers?
The modern workforce has become much less reliant on a fixed office.
This is particularly the case in a sales and advice environment, with home working and therefore mobile phone use becoming more common.
Simply recording fixed line calls is not going to capture everything and would seem to go against the FCA's recommendation that the decision of whether or not to record call should be company policy, not dependent on how and when the call was made.
2. Training and productivity
Recorded calls can help to boost overall productivity. By using examples of calls from a firm's best advisers, best practice can be instilled across all a firm's advisers.
Emma Thomson, LifeSearch Head of Customer Care said: "We are able to record all our calls and it is used to great effect in monitoring advice and training our teams in how to offer the best service.
A quick, simple way to record mobile phone calls would be of benefit too. The more data you can capture, the better not just for the business but for customers too. We need to reach a position as an industry where no honest claimant feels unfairly treated. Recorded conversations help that.
"For example, the bereaved probably won't accept that a close family member has intentionally not disclosed. If they hear a recording of application process, they are more likely to accept and understand the situation.
"Likewise, it can also help to get claims paid if an insurer suggests there was non-disclosure and an adviser can prove the client was not at fault."
3. Protecting clients and paying claims
Unfortunately, disputes are a part of life. There will always be instances where things are lost in translation but if a client thinks his instructions haven't been carried out or an adviser has missed an important detail there is the potential for a misunderstanding to become a full-blown complaint.
There is a reason that call recording is now standard practice for most customer service call centres, and not just for financial services. Recording all calls is a significant benefit when ensuing client records are complete and means there is a quick and easy way to establish what was said and when.
Call recording also removes the need for advisers to try and take word for word notes of a conversation when they are on the move and cuts out the risk that errors will be made due to time pressure or being caught in the middle of another task.
Melissa Collett of Fairer Finance and formerly of the FOS, said: "I think it's an important safety net for both parties to ensure there is a record of the conversation, so that in the event of a dispute both parties are protected.
"One of the main causes of complaints around non-disclosure is the customer alleges that they told the adviser a piece of information but it was not subsequently submitted on the application form. Without a recording it's very difficult to decide what happened."
4. Adding value to a business
More comprehensive and accurate digital call records not only give customers confidence when facts need to be checked, it is also valuable to investors to see a flexible, modern and efficient business that is set up to protect its advisers, clients and monitor its service quality.
The technology is available, it's just a matter of engaging with it and the business benefits will follow.
Ian McKenna, Director at F&TRC says: "Business with good digital records sell for significantly higher values than those where the records are paper based. This is especially true in the context of income received and if such revenue is a one of or recurring amount.
"Without clear information purchases have little on which to base and sale price and will be conservative in what they offer.
"Some firms looking to buy up advisers actively seek firms without good records because they can offer very low prices and increase the value themselves by creating such records.
"Not creating good digital records is like leaving much of the value in your business for the new purchaser to take advantage of, it just does not make sense."
5. The rise of technology
In Protection, some conditions that were once deemed ‘critical' are less so due to advances in detection and treatment. Similarly, data technology that may have once seemed complex, time-consuming and expensive is cheaper and easier than you may think.
We once stored records, CDs and MP3s but now are more likely to stream music, so anyone worried that recording and storing data will be prohibitive need not worry.
The current technology means there are no cupboards full of tapes, no hard drive or internet bandwidth overloaded. It's easier than you might think to record, store and access data and the technology is improving all the time.
Overall, there are many benefits to the business and its customers to record both mobile and fixed line calls. There are solutions available that make voice data straightforward to store and retrieve as and when the business needs to access it.
It is not just a matter of regulation and red tape, it can be of great benefit in making a business slicker, more efficient and more cost effective.
Matt Oldham is Synergy Financial Products CEO, OPAL Group
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