What IT Directors and Professionals Need to Know About MiFID II and Call Recording
Ensuring compliance with an onslaught of new and ever tighter legislation across your organisation is a nuisance at best, but new legal obligations can also seriously challenge your existing business communications and IT services. Such is the case with MiFID II, which places the onus on you to record all voice and electronic communications that could lead or do lead to a transaction between your firm and its clients.
Even if you already have a call recording solution in place to tape your contact centre or client-facing teams, chances are that you will now need to expand your recording solution to remain compliant.
Technology Review
If you haven’t yet reviewed your call recording solution, now is a good time to do your gap analysis and establish whether your current system can satisfy the breadth of recording requirements stipulated by MiFID II.
By 3rd January 2018, financial services firms must be able to reliably capture trade calls across all employee devices and communications channels used for client contact. This concerns actual voice calls as much as it concerns electronic communications such as email and messaging apps. What’s more, you will have to retain all captured data for at least 5 years - and in some instances 7 years - which will invariably raise questions around your data storage capability.
To give you a faster view of your call recording obligations under MiFID II, we have compiled a handy fact sheet that you can take away and share with your team. It is intended as a starting point to your call recording review.
4 R’s – Record, Retain, Reconstruct, Resilience
To get on track for fail-safe compliance, your call recording audit should test for the following four key features.
1. Recording Quality
To serve as evidence when regulators or investigators request to review a client’s history, the trade calls captured need to be of sufficient quality to start with. Does your call recording solution run recording quality tests? Does it flag unusable recordings and qualitative anomalies such as silence or wave distortions? Monitoring the performance of your recorder and usability of your tapes will become an integral part of ensuring compliance. Safeguarding tape quality and integrity also means that records must be stored in a medium that prevents the original file from being modified, deleted or tampered with.
Ask yourself how much data your organisation will have to support in the long term. Does your storage infrastructure need an upgrade to cope with the data volume for 5 to 7 or more years? Now is the time to plan ahead.
2. Data Retention Capacity
There is no doubt that, upon request by a regulator, companies will have to be able to quickly reconstruct events based on recorded conversations. The Dodd-Frank Act, the US equivalent of MiFID II, for instance, requires trade reconstruction within 72 hours of a request. Whether or not MiFID’s associated regulation, MiFIR, will define equally clear timescales is yet to be seen, but the least to expect is this: whichever financial services firm will be able to provide complete client histories the fastest will set the bar - and thereby the expectation of the competent authority.
3. Event Reconstruction Capability
You can only ensure absolute compliance if all trade-related communications are correctly, completely, continuously and reliably recorded and retained. This calls for a resilient call recording solution that provides failover and recovery options.
4. Resilience
You can only ensure absolute compliance if all trade-related communications are correctly, completely, continuously and reliably recorded and retained. This calls for a resilient call recording solution that provides failover and recovery options.
Call on a Technology Partner
The new demands are broad and, just while reading this, you may have already become aware of potential compliance gaps or Unified Comms and mobile strategy challenges this new legislation will pose, but it needn’t be as daunting as it might first appear. If you find yourself a technology partner that complements your compliance call recording solution with platform, network, system integration and managed services expertise, you’ll be travelling a path that achieves compliance without unnecessarily compromising technology strategy put in place to boost employee productivity and customer experience.
Here at Britannic, we partner with Red Box to help financial services firms plan, test, implement and manage cross-channel call recording solutions for compliance and beyond.
Beyond Compliance
Luckily, the benefits of comprehensive call recording are greater than mere compliance. Businesses that look at this transition phase as an opportunity to harness broader technology trends such as Big Data will most likely be able to gain some competitive edge, through deep data-led customer insight and innovated business processes. Now, that’s a MiFID II outcome worth changing for.
Further Resources
MiFID II Legal Text - MiFID II_EUR-Lex - 32014L0065 - EN - EUR-Lex
FCA Final Consultation Paper - FCA Consultation Paper CP16/43, December 2016
FCA Applications and Notifications under MiFID II - FCA Application and notification user guide, January 2017
To get started on MiFID II compliant call recording with Britannic and Red Box Recorders, get in touch with our team on 01483 242526.