FSA Requirement for the Compulsory Recording of Phone Calls
January 26, 2009
To deter and detect market abuse, the Financial Services Authority (“FSA”) in its new rules – the Conduct of Business Sourcebook (Recording of Telephone Conversations and Electronic Communications) Instrument 2008, which comes into force on the 6th of March 2009, requires certain employers in the sector to record telephone conversations and retain electronic communications made in the UK by employees to clients.
Exemptions
There are a few exceptions such as mobile phone conversations and communications (except emails) made with, sent from or received on a mobile telephone or other mobile handheld electronic communication device. However, this exemption stands to be reviewed within 18 months.
Retention of the data
In general, firms must retain recordings for 6 months. However the FSA has added the caveat that firms may be required to keep the recordings for longer than six months; occasionally requiring firms to keep recordings that may be of interest as part of its investigatory and enforcement work.
The recordings must be stored in a medium that allows the storage of the information in a readily accessible way by the FSA. Corrections, amendments, and contents of the records prior to such corrections and amendments must be easily ascertainable and it must not be possible to otherwise manipulate or alter the records.
Other applicable laws
The FSA regulation works in conjunction with other laws which come from a variety of sources including the Telecommunications (Lawful Business Practice) (Interception of Communications) Regulations (2000), the Data Protection Act (1998) and the Regulation of Investigatory Powers Act (2000).
Recording and monitoring outside of FSA purposes
If an organization plans to monitor or record telephone calls apart from the ones required under the FSA scheme, it should be particularly careful not to breach their employees’ or clients’ rights to privacy. The laws in this regard aim to achieve a balance between the employer’s right to know and the employees’ and clients’ right to privacy. An organization is allowed to record phone calls as long as it properly notifies clients and employees that calls are being recorded and that you are recording them for the appropriate purpose such as training.
In general, clients have very limited rights in these telephone calls. Clients do not have to be notified that the call is being recorded if an organization only plans to use the phone calls internally (unless required by law enforcement or the courts) and for a specific set of purposes: to provide evidence of a business transaction, to ensure that a business complies with regulatory procedures, to see that quality standards are being met in the interests of national security, to prevent or detect crime or to secure the effective operation of a telecom system. If an organization wants to record for any purpose outside of this then they will have to notify clients.
Employee rights
The law gives much greater rights to employees of the organization. The employer must not monitor or record an employee’s telephone calls without consent and even with consent an employer can only monitor or record employee communications for the following purposes: establishing the facts of commercial transactions or communications, complying with regulatory or self-regulatory procedures, ensuring appropriate staff standards (i.e. quality control and training), national security, preventing or detecting crime, investigating or detecting the unauthorized use of any telecommunication system, or securing the effective operation of such system.
Employers have the legal authority to monitor but not record employee communications without consent only for very narrow purposes but in practice it is extremely difficult to justify this type of monitoring. Additionally, the employer must disregard any information obtained through covert monitoring which does not relate to a criminal activity or to malpractice lawfully. Employees have a right to privacy and a certain degree of trust in the workplace so courts rarely find that covert monitoring is justified especially when it results in job termination or other disciplinary measures.
