Financial Service Firms Can Benefit from New Recording Requirements
October 13, 2014
By Mae Kowalke
TMCnet Contributor
A lot rides on the average financial transaction, making conduct within the financial services industry one of the most tricky. A miscommunication can have a huge impact, and there also is more temptation for ethically dubious behavior.
Part of the safeguards in place include enhanced regulatory oversight, which theoretically should curb such trouble. But it still is possible to follow the letter of the law and not its intent. And even if financial agents do everything right, mistakes still happen.
Technology and regulation about how to use technology to curb these abuses is stepping into the breach. Hot on the heels of the Dodd-Frank act in the U.S., the European Union’s MiFID II regulation intends to further cut down on abuse with new rules on recording and records retention requirements when it comes to financial service firms.
The new rules mean that European privacy laws may no longer shield companies from the obligation to monitor, capture and store all communication relating to financial trades, and the EU has signaled that financial market stability trumps individual privacy concerns. Read: Recording financial transactions properly is more important than ever to maintain public safety in the digital age.
Increased recording requirements not only enable better transparency that can cut down on ethically dubious behavior in the industry, but it also offers an opportunity for financial firms to cover themselves against miscommunications and hold employees to higher accountability standards.
Recording solutions such as ISI’s (News - Alert) Verba Voice and Immersive Video Recording help financial services firms quickly and easily ensure that verbal contracts carry the same reliability as written ones, in that both sides have a record and assurance that deals have been made as agreed.
Call recording can provide unquestionable proof to specific language used in verbal negotiations and do it through either the recording of full conversations or the portion of a conversation where the transaction is agreed upon. A good recording solution can store these recordings with a customer’s ID or other identifying information, and it can be retrieved at a moment’s notice if there is a dispute.
While enhanced recording requirements may look like yet another burden for businesses that handle financial transactions, it really is an opportunity in disguise because it forces the industry to take recording seriously. With good recording in place, businesses not only cover themselves against liability, they also provide training feedback and a clear window into which agents are working up to par and which need help. Dubious transactions that may follow the letter of the law but not the spirit also can be more quickly identified, and employees engaging in such behavior can be identified.
Proactively leveraging recording technology can lead to increased efficiency, reduced liability, and better informed training and management.
Regulation might lead the way, but it also can have a positive impact on the firms themselves.
Edited by Stefania Viscusi