The Financial Conduct Authority (FCA) has taken a step back on proposals that would have seen advisers record all phone calls to clients.
In publishing an update of the proposed phone-recording rules, alongside its fifth Markets in Financial Instruments Directives II (MiFID II) consultation paper, the regulator said a full taping obligation for advisers "may not always be appropriate" due to the business model of some firms.
In light of feedback on its consultation, the FCA will now allow advisers to comply with the so-called "at least analogous" rule, which means either taping all "relevant" phone conversations or taking down written notes on those conversations.
The regulator will publish its final rules on phone recordings in its MiFID II policy statement in June. It said it was also considering feedback on other phone-recording proposals.
In its third consultation paper on the European legislation, published in September, the FCA said: "We think taping conversations between firms and their clients is likely to be an effective way of advancing our consumer protection objective."
In September, the regulator did say it was open to considering an alternative approach for smaller advice firms, although it did not signal any significant change of heart.
At that point, it said it wanted to implement its original, stricter recording regime because it found the majority of complaints to the Financial Ombudsman Service gravitated around conversations leading to or involving a sale.
FCA executive director of strategy and competition Christopher Woolard said: "MiFID II introduces substantial and wide ranging measures designed to improve investor protection and promote market integrity."
MiFID II legislation is due to come into effect on 3 January 2018.
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