How the Markets in Financial Instruments Directive Will Impact the Contact Centre

Even after Brexit, legislation continues to be introduced from Brussels, applicable to and enforceable in the UK, long after its departure. 

Two pieces of such new legislation, GDPR (General Data Protection Regulation) and MiFID II (Markets in Financial Instruments Directive), will impact the channel within the next twelve months, but of the two it is MiFID that will be implemented first when it comes in to force on 3 January 2018.

Briefly, for this is a sophisticated and complex piece of legislation, MiFID II is the second attempt by the EU to tidy up and tighten the market for investment intermediaries that provide services to clients around shares, bonds, units in collective investment schemes and derivatives (collectively known as ‘financial instruments’).

The weaknesses in the structure of the original 2004 directive, which did succeed in lowering prices and expanding choices for investors, were highlighted by the financial crash of 2008.

MiFID II is widely regarded as the single largest and most significant regulatory initiative undertaken by the European Union since 2008. As a result, it is likely to reshape the face of European capital markets and will have a major impact on investment firms from both a commercial and operational perspective.

The impact for the contact centre is largely one of sales opportunity, once resellers can get their heads around identifying where their sales market is.

In a nutshell, MiFID II requires asset managers in firms providing these ‘financial instruments’ not only to record their all telephone calls but to hold these call records in an uncompressed form for five years.

However, in the UK, industry regulator the Financial Conduct Authority (FCA) proposes extending the recording requirement to all ‘Article 3’ firms (those that may be exempt from the MiFID regulations), which will then encompass financial advice firms and corporate finance boutiques.

This is because the Financial Ombudsman Service information has shown that the majority of complaints about investments centre on the conversations when investments are sold.

Under MiFID II, firms are required to record telephone conversations and electronic communications that relate to “the reception, transmission and execution of orders, or dealing on own account.”

The requirement to record phone calls is applicable to both fixed-line and mobile phone calls, and all these recordings must be held for at least five years.

Our advice to the channel at this stage is that resellers wanting to engage in this large vertical market for call recording should be talking with potential solution-provider partners now in order to become familiar with the sales propositions that need to be developed.

Find out more by visiting www.oak.co.uk