The Dodd-Frank Act, Call Recording and Trump's Presidency
23 January 2017
What is Dodd-Frank?
The Dodd-Frank act is an extensive set of financial regulations that was signed into federal law by Obama in 2010. The act is a direct response to the Financial Crisis of 2007, which was the subject of the 2015 film The Big Short. After the financial crash there was a widespread call for financial reform. The Dodd-Frank act is the most significant financial reforms since the legislation that followed the Great Depression.
The main aim of Dodd-Frank is to encourage financial stability in the US with a series of measures:
Increasing transparency in the financial system
Ending bailouts to protect taxpayers
Putting an end to the ‘too big to fail’ attitude
Taking steps to protect consumers from abusive financial advice
The Dodd-Frank act is an extensive and complex list of restrictions and regulations for the financial industry, of which those relating to voice recording are among the most important and yet most difficult to adhere to. The regulations, motives and implications for companies in the financial sector are similar to the recent MiFID II act announced by the EU, set to take hold in 2018.
What are the Call Recording Requirements of Dodd-Frank?
The Dodd-Frank act introduced voice recording regulations to promote record keeping and tackle transparency and accountability, which were prominent issues in the financial crisis of 2007. The regulations forced radical change to the record-keeping processes of financial companies. The key call recording requirements include:
All communications relating to trade information must be recorded across all communication methods - including telephone, voicemail, instant messaging, email and others.
Records must be time stamped in a uniform system
All records must be sufficiently organised to enable easy search and identification
All records must be securely stored for up to 5 years
Compliance with these strict regulations can be very costly and complicated. It has been estimated that legacy call recording solutions add approximately £1,000 - £1,200 to company phone bills every year - and that is without the upfront costs of implementation.
However, Dodd-Frank has been deemed too complex by a long list of politicians and financial experts. Key difficulties with compliance include security concerns as a result of the large volume of data that must be stored, complications with retrieving data, hardware limitations on scale and speed, and adapting to any change in regulations.
Cartoon by Marshal Ramsey
Legacy recording solutions operate from hardware, which ultimately generates high upfront costs, limited scale and limited accessibility of data, as well as being slow to deploy and expensive to upgrade and maintain. Dubber’s call recording solution offers an alternative by operating from a native cloud platform - eliminating the flaws of legacy solutions and opening up a myriad of benefits for users. Our cloud call recording solution offers unlimited scalability, rapid deployment, high security, no upfront costs and a host of innovative add-on features that help to ease the headache of compliance.
What Will Happen to Financial Regulations Following Trump’s Election?
The election of Donald Trump could soon change these laws. Financial stocks spiked immediately following his election, and it is believed that this is because of Trump’s campaign promise to abandon or completely revise the Dodd-Frank act.
Graph from Business Insider, showing the spiking of financial stocks following Trump's election (the red line)
Trump’s Dodd-Frank promise comes as no surprise, as the act has drawn significant criticism from many Republicans. Their main issue is with the large number of regulations: “Bureaucratic red tape and Washington mandates are not the answer to improving the financial system.” (Quote from Trump’s website).
A likely replacement is the CHOICE Act that has been compiled by Jeb Hensarling, the chair of the House Financial Services Committee. The CHOICE Act proposes enforcing a 10% capital requirement on banks, where their capital must be at least 10% of their assets. This would certainly be a simpler system, protecting banks from financial collapse with a single regulation. The idea may prove too simple, and ultimately may fail as protection from another financial crisis.
There is of course an argument for and against both directives, but a major concern for financial firms is ensuring they are able to remain compliant after any future reforms. The Dodd-Frank act took years to write and implement into law, and so would likely take years to reform.
This complicates compliance for financial firms, who must remain meet the requirements of Dodd-Frank for an unknown amount of time, whilst having the flexibility to change after future reform without suffering financial strain.
We Can Help
Dubber’s cloud call recording provides suitable assistance with compliance to any official legislation. Our communication capture solutions currently assist companies with PCI, FCA and MiFID compliance, and are perfectly suited to assist with Dodd-Frank compliance as well:
Communications must be recorded across all devices - Dubber’s communication capture solutions are available on mobile devices and our RESTful API enables easy integration with Unified Communications solutions
Records must be identifiable and searchable - Dubber offers Smart Search features which can efficiently sift through large volumes of data
Records must be stored for up to 5 years - the unlimited scalability and high security of Dubber’s solutions allow for limitless storage of data
Most importantly however, Dubber’s unlimited scalability allows companies to scale the call recording and communication capture solutions to fit their individual needs, as they grow and change. Adapting to any future reforms under the Trump administration is therefore made easy by automatic scaling - without the costs of upgrading or downsizing any hardware.