Firms involved in the equity, bond, and derivatives markets will need to record telephone conversations and electronic communications relating to client orders and the conclusion of transactions.
The change follows consultation over the past year with the industry, discussing cost benefits and practicalities, and initial proposals have changed significantly.
Firms will only be required to retain recorded phone calls and communications for six months rather than three years and mobile conversations will be exempt. This will be reviewed in 18 months’ time.
Melanie Bien, director at Savills, commented that it was possible the mortgage market would face such rule changes, but added: “Obviously, there are issues of client confidentiality, which is paramount. But it’s probable that it will happen in the mortgage market eventually.
"Yet, brokers already have a lot of compliance issues that they have to take on board. There is an element of covering their backs and for brokers who do their job correctly, it does cover them.”
Ray Boulger, senior technical manager for John Charcol, said: “A lot depends on how you operate. We have one division where we operate over the phone, one face-to-face, and the other division is online.
"With telephone advice, all the calls are recorded and if there is a query later it can be very helpful. But when face-to-face, you can’t really do that. An initial phone call might not have much detail or lots. The advice is the most important thing and that won’t be over the phone.
Having a record of telephone calls for those face-to-face meetings will not be of much use.
Boulger added: “The financial services regulator doesn’t require mortgage intermediaries to have a suitability letter, but it’s a useful reference for the client, and the broker has on file the product recommendation and reasons why. Having the suitability letter is a good discipline.”
