LONDON, March 17 (IFR) - UK regulators are turning a blind
eye to rules on mobile phone recording introduced more than two
years ago after concluding that technology may not yet be widely
enough available to implement the requirements, according to
The Financial Services Authority enacted new rules in 2009
requiring financial institutions to record all "relevant"
communications their employees held on mobile phones. However,
warnings from the industry that the technology was not advanced
enough caused the FSA to postpone introducing the rules until
Analysts have estimated that since then as few as 33% of
firms are in compliance. Large banks and those with operations
in a number of jurisdictions are understood to be the ones
having most difficulty recording staff conversations.
Banks approached the FSA in early 2012, arguing that the
technology on offer made compliance impossible for many.
The FSA was replaced by the Financial Conduct Authority last
year. While it has not issued a formal exemption or grace
period, no bank has been fined for non-compliance.
"Nobody has come to market yet with a rock-solid solution
that the FCA is comfortable with," said Rik Turner, a senior
analyst at financial services technology firm Ovum. "We know a
lot of institutions have made pilot schemes so they can go to
the FCA and say: 'Look, we are doing everything we can, but
that's about it'."
Bankers themselves reacted with some confusion and
uncertainty as to whether or not their mobiles were being
recorded. Some said they were not aware of their phones being
monitored, and others said they thought only fixed lines were
Recording mobile phones is usually done in one of two ways.
The first is by using an application, where a bank would put
monitoring software on a phone's operating system. This approach
has drawbacks as the software needs to set up a second call and
send it to a recording server, which can cause voice delays of a
few seconds and cause problems on a trading desk that relies on
IT departments also face difficulties implementing this
method when bankers use different types of phones and operating
The second approach is to use a broader network and SIM
card-based system, via a mobile network operator. However, the
cost of putting this in place can be astronomical, according to
analysts, and there have been security concerns. In December
2011, one unidentified bank found it was able to access a rival
institution's recording that was using the same network,
according to Ovum.
Banks in the UK have been obliged to record fixed-line calls
made by bankers since 2009, mainly to tackle market abuse and
misconduct and help the FSA monitor, investigate and prosecute
Officials from telephone recording firms say a solution may
still be years away.
"Fixed line is no problem, but mobile is a totally different
beast," said Carl Nancollas, channel manager at Storacall, a
firm that specialises in phone recording and has invested
considerable time in finding a workable product for mobiles.
"It's been a nightmare, to be honest. We've not found a solution
yet that is reliable or cost-effective. But eventually something
will come up with all the demand for it. I'm surprised that the
mainstream networks haven't been working on this."
The FCA confirmed to IFR that there have been no enforcement
cases to date.
"All relevant firms have had to implement systems to comply
with our rules and the technology has been working successfully
for a number of years," the FCA said in a statement to IFR. "We
expect all firms to be compliant. There are a number of
technology firms that have designed systems specifically for
this, most notably Vodafone."
(This article is from the latest issue of the International
Financing Review, a Thomson Reuters publication: www.ifre.com