What is MiFID II, and does it impact my business?

Following on from the new EU regulations General Data Protection Regulation (GDPR) is the revised Markets in Financial Instruments Directive (MiFID II) which is being rolled out as of January 2018. Both the MiFID II and GDPR regulations aim to provide increased protection to customers and theoretically at least, promote positive practices across industries involved in telephone sales.

Under MiFID, financial advisers and investment firms will need to record all communications leading to transactions.

The new legislation essentially focuses on all the steps leading to the sale of a financial instrument rather than just the final verbal contract as has been the case previously. The telephone conversations of those involved in the communication channel leading to a financial transaction will need to be recorded in case of any disputes arising between client and advisor. Dates, timing and locations of meetings require being easily and readily available to management to retrace the steps of a financial instrument sale. Orders positioned by clients will also need to be recorded for five years rather than the current legislation which requires six months.

In combination with GDPR, MiFID II will change the way clients and advisors communicate over the phone.

Combining this with the new GDPR regulations, this means financial services firms will have to not only justify every phone call, but also notify their customers that the call recording is being taken and carry out the recording in a durable manner to ensure all relevant information is retained. The accumulation of these two pieces of legislation will directly and appreciably change how telephone calls are conducted and how the client-advisor relationship functions. With the need for calls to be recorded and the need for the client to be informed that the call recording is taking place this certainly changes the pitch of pitch of the call and suggests relations will move to a more professional, business orientated speaking manner opposed to the informal exchange of advice.

As such, the implementations of both measures will require far greater consideration from management.

MiFID II has implications for how physically the organisation will go about recording and storing relevant information securely and secondly for the training and knowledge gap that needs to bridged by the workforce. Finally, businesses will need to reconsider policy regarding personal employee calls. Under normal circumstances, most employees are able to make calls from work phones without an issue, under new regulations regarding sensitive information it will be sensible for businesses to have more strict measures in place for how employees use telephones for personal use.

Certainly, this heightened security will have an impact on client-company relations. However, it is open to debate as to whether this increased vigilance will help usher more transparency and openness in relations or simply lead both parties have to tread more defensively and put up a guard around information.

If you require further information or would like to get advice on how to go about your call recording under the new GDPR and MiFID II regulations, please don’t hesitate to get in touch!

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