At a recent seminar held ahead of the 6 March 2009 FSA deadline to record and store all relevant telephone and electronic communications, firms were advised to meet their taping requirements, while avoiding risk and ensuring the evidential weight of their documentation.
Organised by Open-Tec and Obsidian Wireless, that have developed a data capturing and Repository solution for mobile voice and SMS recording and storage, attendees also heard the views of the FSA’s Sumaiya Khoda, and Peter Howes, a member of the BSI panel responsible for their evidential weight and legal admissibility codes -standard.
Commenting on the seminar, attendee John Bromley, manager of voice and market data services at Commerzbank, said: “We found the quality and content of the day to be excellent. The presentation by the FSA was informative, and noted with interest that one of the principle reasons they have delayed mandating the recording of mobile communication was because, at the time, solutions were not widely used or sufficiently proven.
“The seminar opened up new areas of thought around the importance of not just of storing information for the regulators, but as a key requirement of a broader risk management strategy and the absolute need to ensure that any captured data has evidential weight,” continued Bromley. “The live demonstrations showing the capture of voice, SMS and IM were also impressive.”
The new FSA requirements state that a firm must take reasonable steps to retain all relevant records made by it for a period of at least six months and in a medium that permits the FSA to access the records readily. Where corrections or amendments are required to such records then the situation prior to these changes should also be easily ascertained from the records, meaning an audit trail needs to be maintained of the changes made. This new requirement will help firms to deter market abuse if staff know that their conversations are going to be recorded.
Mobile conversations have been made exempt from this regulation at present, yet this will be reviewed mid to late 2009. However industry expects that this will be included as the current typical solution, which is to ban use of mobile phones, is impractical.
Sumaiya Khoda from the FSA said: “Preventing, detecting and deterring market abuse is one of our key priorities. However, market abuse is one of the most difficult offences to investigate and prosecute. Good quality recordings of voice conversations and of electronic communications (taping) help firms and us detect and deter inappropriate behaviour.”
Paul Liesching, CEO at Obsidian Group, commented: “The relationship between risk, regulation, compliance and technology is key for everyone operating in the financial sector at present. It’s now fact that mobile communication is the universal cornerstone of commercial communication but at the same time, due to the increasingly powerful nature of the technology, mobile communications represents a very significant point of risk. Success will be based on the convergence of compliance and technology and the solutions demonstrated at the event are proof that help is out there.”