Complete Documentation for Customer Protection
MiFID was conceived nearly ten years ago, like the European version of the Sarbanes-Oxley Act, with the aim of making the European finance industry more transparent and providing more protection for investors. Whilst the initial version only focussed on a few select asset classes and securities, the latest version of MiFID is much more…extensive. Consultations by phone or any other form of electronic communication must be recorded and archived for customer protection, and stored for five years.
The legislature offers little assistance in this regard, and starting in 2018, banks, insurance companies and contact centers in the financial services industry will be responsible for complying with MiFID II regulations. Incidentally, this not only applies to interactions that ultimately lead to a business transaction between the provider and the customer. MiFID II requires the recording of all communications, including conversations in which providers merely supply information or give advice, regardless of the customer’s consent. This means that every organisation that sells securities is affected by MiFID II regulations– from small brokerage houses to commercial banks.
Using Legacy Systems Could End Up Being Expensive
Because it’s difficult in daily practice to spontaneously resolve questions about when a conversation should be recorded and when not, financial institutions require technical solutions that can document and securely archive every type of communication. However, this turns out to be a task of Herculean proportions for the financial sector: The sector’s IT infrastructure has been established over decades and as a result, it is largely based on inflexible solutions. Making the necessary adjustments to meet MiFID II will come at considerable costs.
Considering the tight time lines and the significant financial expenditure involved in the development of functions for the secure recording of customer communications, this is virtually turning into a ‘mission impossible’ – especially for organisations that haven’t even started to implement MiFID II. In addition, organisations are finding themselves at a technical impasse: If the legal provisions change again, last-minute adjustments that were made to legacy systems at high costs could become obsolete again, in just a short period of time.
Maximum Security, Maximum Flexibility – Cloud services work for MiFID II
This is where specialised cloud solutions, which offer a customised range of functions specifically for the requirements of MiFID II, can help. Modern cloud services like Neorecording offer a highly secure architecture that ensures uninterrupted operation in the event of disaster. The latest encryption technologies ensure that all interactions are safely recorded and archived according to the strictest security standards. The cloud service provider also takes care of all system maintenance and updates.
Those looking for an easy, secure and affordable solution to satisfy MiFID II regulations should immediately contact a cloud service provider. Here at NFON, all communication processes are based on a single platform that can be flexibly adapted to changing needs, ensuring predictable and reasonable costs. And the best part? All this can be implemented in a very short time – whether for an insurance brokerage firm, a financial institution, or contact centers.
The bottom line
The MiFID II Markets in Financial Instruments Directive, which will soon come into force, considerably intensifies the documentation requirements for financial sector organisations. Every type of customer communication that could lead to a business transaction must be recorded and archived in a legally secure manner. Compliance with the new regulations is monitored by the Federal Financial Supervisory Authority, and violations are punished with high fines. Cloud solutions such as Neorecording ensure rapid adaption to MiFID II requirements and are a flexible alternative to costly legacy system expansions.