BYOD makes compliance with financial phone recording rules challenging
The increasing use of BYOD by financial firms is making compliance with financial phone recording rules--put in place following the global financial meltdown--much more difficult.
To ensure that financial advisers are providing reasonable advice to their clients, many countries have enacted laws requiring financial firms to record conversations with clients about securities and foreign exchange trading, explains Andrei Papay with Business Spectator.
These regulations in general require financial firms to prove "best interest" when providing "relevant advice" to clients, Papay relates. But what if that relevant advice is provided over an adviser's personal smartphone? Is the financial firm required to record that advice and could the adviser object on legal grounds?
For example, the Dodd Frank legislation, passed in response to the Wall Street meltdown, requires financial institutions and other firms engaged in swap and derivatives trading to record phone conversations and keep detailed records of discussions with clients, according to a report by Telecom Reseller.
The law requires financial institutions to record all oral communications, whether in-person or on a fixed-line or mobile phone, about swap and derivatives trading, and retain those records in a searchable format for one year. The compliance deadline was extended from November of last year to March of this year, the report noted.
According to the final rule issued by the Commodity Futures Trading Commission, institutions engaged in swap transactions must retain, "at a minimum, records of all oral and written communications provided or received concerning quotes, solicitations, bids, offers, instructions, trading, and prices, that lead to the execution of a swap, whether communicated by telephone, voicemail, facsimile, instant messaging, chat rooms, electronic mail, mobile device, or other digital or electronic media."
Australia passed its own financial advice recording and monitoring law, which became mandatory this month. However, the requirement to record mobile devices is not covered by mandatory rules, but is "highly recommended" to prove "best interest," notes Papay.
"The need to ensure compliance wherever business is done is a big challenge for IT, and BYOD creates a new wave of challenges for business in ensuring their compliance needs are met," Papay concludes.