Innovative Solutions to the Challenges of New APAC Regulations
10 April 2017
With the countdown to the MiFID II regulations on the financial sector within the EU continuing apace - we take a look at the APAC call recording regulations that have been put in place since the Global Financial Crisis of 2007.
Eleven members of the G20 summit, including Australia, China, Hong Kong, and Singapore, have committed to a host of regulations for their banks. The aim of these regulations is to improve transparency in the financial industries and reduce risk culture. These measures should restore the trust in investors and consumers that may have been lost in recent years.
With MiFID II mandating the recording of all mobile calls and text messages relating to financial advice and wealth management, it is unsurprising that Asia-Pacific should follow suit with its own extensive regulations.
Burden of proof
Although there is not a cohesive set of compliance guidelines for the region, the unifying theme of the regulations is financial services providers acting in the best interests of their consumers.
The Future of Financial Advice (FoFA) Act introduced by the Australian government, designed to nurture trust in customers and encourage transparency in financial service providers, states that financial advisors must act in the best interests of their clients. Best practice guidelines released by the Australian Securities & Investments Commission describe how records should be kept to show how this is being upheld. In order to comply with these guidelines, all communications with clients will need to be captured and stored securely.
The Hong Kong Monetary Authority also requires that institutions selling investment products maintain adequate records to demonstrate that they have advised their clients appropriately - this includes audio recording. Where repeated transactions are requested over the phone, these calls must be recorded to prove that customers are aware of any continued risks before continuing with their investments. Any waivers of risk disclosure should also be recorded as evidence.
Chart from Nielsen Q4 2016 Consumer Confidence Report
Similarly, the Chinese Protection of Consumer Rights and Interests Amendment places the burden of proof on service providers in the event of a dispute. Chinese and Hong Kong banks, are also required to keep records of client communications, including audio recordings, in all derivatives transactions. These must be kept readily accessible for a minimum of five years after the transaction has matured or been terminated. The Nielsen Consumer Confidence Index (see chart above) shows that Chinese consumer confidence has increased in Q4 of 2016, which shows promising signs for the new regulations.
The Monetary Authority of Singapore, in its guidelines on risk management practices, states that institutions should maintain records of telephone calls involving trades and discussions with customers on proposed transactions. Transaction information should be stored ‘in a manner that is reasonably practicable to retrieve’ until at least five years after the last date of expiry or termination of a contract. Storage for this length of time tends to be a major challenge for legacy call recording solutions, especially as financial organisations grow. The costs involved can increase dramatically with the storage requirements. With a native cloud solution, scalability is built into the service - allowing organisations to manage their data without any extra hardware.
Chart from World Economic Forum
It’s not all doom and gloom
As regulations and guidelines around financial services tighten to protect taxpayers and consumers, technology providers strive to innovate solutions to help organisations along this road. For instance we have seen solutions such as Dubber working with service providers to provide finance-focused call recording solutions to overcome these challenges.
Solutions such as Dubber’s native cloud call recording will be an instrumental service for organisations wishing to comply with these guidelines. Just like the paper trail of emails, it provides proof that specific information was supplied to a client, ensuring advice was given in their best interest. Not only is the implementation of this service quick and easy, there are numerous commercial benefits that accompany it.
Keeping customer service and user experience at the forefront of your business strategy is vital for success, and there is no reason that this shouldn’t be the case when maintaining compliance with regulations. The systems that have been put in place by financial authorities to maintain consumer interests can actually help banks to identify consumer behaviour patterns that can help them to understand their customers and improve their business.
Safe storage that is easily accessible, is something that you can expect from native cloud solutions. Without the need for any hardware, Dubber can provide long-term secure storage for your calls, which can be accessed in a flash. Solutions such as Dubber’s platform offering, which utilise third party infrastructure as a service solutions such as Amazon Web Services, experience vast benefits such as scalable storage and enhanced cloud security. Prioritising security is all part of the AWS cloud infrastructure, which is constantly evolving to protect your data.